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official data. The cash in circulation then fell steadily till June last year before jumping 6% on-month to 15.2 trillion rubles in September — which coincided with Putin's mobilization of reservists to fight the war. The amount of cash in circulation has been trending upward since then.
Last year, American banks tripled (to $6bn) arbitrage with the ruble. The largest of them - Goldman Sachs, Citigroup and JPMorgan - have earned hundreds ofmns of dollars each, and their ruble traders have probably doubled their bonuses, writes Bloomberg cited by The Bell.
The short period of the first months of the war, when the internal exchange rate of the ruble, “inflated” by restrictions on the withdrawal of capital, allowed Wall Street banks to profitably withdraw the rubles of foreign companies fleeing Russia. Some of the largest banks - Bank of America, UBS and HSBC - decided not to participate in such arbitration, still fearing secondary sanctions.
Intermediary banks from countries "friendly" to Russia - Kazakh Halyk, Jusan and Kaspi Bank, as well as Armenian Ameriabank turned out to be the key link. “These banks were able to buy dollars directly from Russian partners close to the Central Bank rate, which was often much lower than what was used abroad,” the agency writes.
“Let’s say it’s May 20, 2022,” it explains a simple diagram. — A trader in Kazakhstan buys $10mn from a Russian bank at an “onshore” rate of 59 rubles to the dollar, slips the ruble on the dollar when selling to a Wall Street partner, and thus pockets $169,000. The partner sells dollars to an international client close to the offshore rate of 61.5 rubles per dollar, and already receives about $250,000.” On the Russian side, the transfer of rubles into foreign dollars was facilitated by Gazprombank, Raiffeisen and Ak-Bars, Bloomberg claims. Banks do not comment on this.
It is not known exactly how much intermediaries earned on arbitration with the ruble. Bloomberg only answered Ameriabank - its representative insists that the share of such transactions was small. However, the same Halyk quadrupled its FX revenue, Jusan almost tripled, and Ameria, controlled by Ruben Vardanyan, quintupled (albeit to a modest $109mn).
Now transactions of this kind are also possible, but there is no talk of the former profitability.
Bank traders did nothing illegal (and, of course, they did not work without legal cover), but they took advantage of the situation, Bloomberg notes.
Sources of the agency are sure that clients who managed to leave Russia before the restrictions and the threat of nationalization are not in a complaint. “When assets are burning, you need to sell, not wait for the best price,” Naresh Aggarwal, assistant director of the London-based Corporate Finance
RUSSIA Country Report September 2023 www.intellinews.com