Russian Banks Face Challenges Amid China's Strict Adherence to Sanctions

VLADIVOSTOK (Sputnik) – Russian banks, including Russian's second largest bank VTB, are experiencing difficulties with some transactions that involve Chinese financial institutions because of the sanctions imposed against Russia over the Ukrainian crisis, First Deputy President and Chairman of VTB Bank Management Board Vasily Titov said on Saturday.

"The problem of sanctions, which is a rather sharp one for Russian companies and banks, has unexpectedly surfaced in Russian-Chinese bilateral relations," Titov said at the Eastern Economic Forum (EEF) in the Russian Far East city of Vladivostok.

Part of the problem is that Chinese banks are very scrupulous in following the sanctions regime and Russian banks spend too much time discussing the details with their Chinese partners, which causes delays in transactions, said Titov.

"We are facing serious challenges in the implementation of payments and settlements through Chinese banks: what used to happen in one afternoon, now takes up to two weeks," Titov said.

The Russian banking system took a hit with the depreciation of the ruble, which lost almost a half its value against the dollar in 2014 due to a sharp decline in global oil prices. In addition, several major Russian banks, including VTB, are subject to sanctions by the West over the situation in Ukraine, prohibiting them from obtaining long-term credit on Western financial markets.

Russian banks have shifted economic cooperation to other countries, particularly China, amid the sanctions regime.

Earlier this year, VTB signed agreements on partnership with China Development Bank, Export-Import Bank of China and China Export and Credit Insurance Corporation.

In June, VTB said that most Chinese banks were not conducting interbank operations with Russian banks and had lowered their involvement in foreign trade deals amid Western anti-Russia sanctions.