The Industrial and Commercial Bank of China, Bank of China, China Construction Bank and Agricultural Bank of China quadrupled their assets in Russia $2.2bn to $9.7bn in the 14 months to March 2023, the Financial Times reported citing the estimates of the Kyiv School of Economics based on the data of Central Bank of Russia (CBR). Out of that, ICBC and Bank of China together account for $8.8bn.

Since the start of the full-scale military invasion of Ukraine, Russia’s financial system has undergone a rapid process of yuanisation as Russia attempts to de-dollarise itself.

The Chinese banks are filling in the vacant space left after Western lenders pulled out of Russia or limited their activities following the fallout from the full-scale military invasion of Ukraine. As followed by bne IntelliNews, mostly financing foreign trade deals, the trend is also part of Beijing’s efforts to promote the Chinese yuan as a global currency alternative to the US dollar.

However, all of the Chinese banks combined still trailed far behind the largest Western lender in Russia Austria’s Raiffeisen Bank that increased assets in the country by over more than 40% from $20.5bn to $29.2bn over the same period.

Raiffeisen claimed that it has reduced its assets to $25.5bn since March 2023, while looking for ways to exit Russia.

Currently the Chinese yuan accounts for 16% of Russia’s exports payments (soaring from 1% before the invasion), while the “unfriendly” currencies of Russia-sanctioning countries (mostly US dollar and euro accounted for less than 50%, down from over 60%).

Overall, the proportion of Russian banking assets held by foreign lenders decreased from 6.2% to 4.9% in the 14 months to March 2023.