PRC is becoming a major trading partner of Russia, therefore there is nothing surprising in the fact that the amount of economic cooperation between the two countries is growing rapidly. In this regard banks have new challenges within the area of transactions in yuans and rubles. Oleg BARANOVSKY, board chairman of the Bank of Settlements and Savings, told NBJ about solution of such issues by the bank.

NBJ: What are new services offered by the Bank of Settlements and Savings for its current and potential partners within the bank sector?

O. BARANOVSKY: First of all, we offer the settlement services for correspondent banks and our clients involved in foreign trade contracts with Chinese counterparts as in national currency (yuan, ruble) so as in dollars. Yuan transactions enable our customers to reduce the impact of such factors as the volatility of exchange rates, to make direct conversions with foreign exchange and save on the conversion costs, as well as on commissions, as our commission rates for the transactions in China are lower than in any other Russian bank. It also possible to establish a customer relationship with a more transparent pricing policy for Chinese suppliers. The transaction time decreases, as we work without intermediary banks. Another important issue for many financial institutions is the number of requests for transactions from the U.S. credit organizations: the requests usually come in large numbers during the dollar transactions through U.S. and European banks. And when the transactions are performed via Chinese banks such requests from Americans become rare or there are no such requests at all.

NBJ: What main risks are eliminated in case of yuan transactions? Could you please tell us more about the pros of it?

O. BARANOVSKY: The main risk which I have already mentioned is eliminated. It's the volatility of exchange rates. When the contract settlements are performed in U.S. dollars Chinese suppliers are constantly raising commodity prices due to U.S. currency fluctuations. The yuan contracts allow to avoid price increase.

The second advantage obtained by our customers is cost reduction. Chinese suppliers include possible financial conversion losses in their prices. Yuan transactions allow them to avoid it. Thus, there is no substantial price increase for goods, the funds transfer to the beneficiary's account is carried out in full.

When transactions are carried out in U.S. dollars every bank within the intermediary chain takes its commission from the transferred amount. Thus, the transfer shall be performed in "reduced" form. This is an inconvenience for the final settlement with a supplier, as the amount credited to the payee's account differs from the originally sent amount.

Due to the fact that the yuan transfers are performed in China's national payment system, the amounts are transferred to a recipient in full, as there are no intermediary banks.

It is worth mentioning the efficiency of such transactions by our bank. We work directly with the largest lending institutions in China and Hong Kong, and the amounts are credited to the recipient's account on the same day. It is also due to the lack of intermediaries during the transactions.

NBJ: And which of the benefits mentioned by you is the most important one in your opinion?

O. BARANOVSKY: It's the vast geography of transactions. Currently, yuan transactions have spread over the whole territory of China. Direct relationships with Hong Kong banks allow to perform any yuan transactions worldwide. Our clients are relieved of the need to open a yuan account in China which is a long, complex and multi-step process. Also there is no need of working directly with Chinese financial institutions to avoid such risks as the emergence of a language barrier, a complex workflow, lack of information on Chinese banks, lack of understanding concerning the business procedures in China.

We perform a large amount of transactions. This allows our customers to have bank services at the lowest rates concerning the cash transfers in yuans and dollars.

NBJ: Could you enumerate the range of cash management services in China that your bank offers to its correspondent banks and other partner?

O. BARANOVSKY: Here is the full range of services with Chinese yuans and dollars in China: the transfers from individuals and legal persons, deposits, transfers in yuans and dollars, yuan buying at the stock market through our bank with the following client transfers, document operations, trade financing, and yuan transactions in cash for future. The range of services offered by our bank is due to the presence of a wide correspondent network. Even the majority of Chinese lending institutions do not offer all of these services at the same time.

NBJ: Tell us about the history of your bank's relationship with the Chinese financial and credit institutions.

O. BARANOVSKY: The Bank of Settlements and Savings has long-term experience in working with the countries of East and South-East Asia, including Korea and Vietnam. Our bank cooperates with the largest banks in China and Hong Kong, including the Bank of China, Bank of Communications, Baoshang Bank and others.

Our bank plans to increase the presence in the Chinese financial sector by joining the Asian regional financial forums and organizations, increase the network of correspondents and partners and then to open representative offices, branches with a possible entry into the Chinese bank capital.