23 Jun 2022 12:49

Banks making forex accounts unattractive to 'change behavior patterns' of clients - Tinkoff CEO

MOSCOW. June 23 (Interfax) - Tinkoff Bank (SPB: TCS ) has introduced commissions on certain foreign currency accounts and SWIFT transfers in an attempt to change the usual behaviour of clients who prefer to keep funds in dollars and euros in the absence of reliable assets in these currencies, the bank's CEO, Stanislav Bliznyuk said.

"The most important thing that banks can do for clients right now is to encourage them to think about alternatives to dollar savings and offer them these alternatives. Restrictions on forex transactions - commissions and so on - are not a means to make money, this is a call for clients to change patterns of behaviour without delay," Bliznyuk said in a column for business daily Vedomosti.

Tinkoff Bank announced earlier that it would introduce a commission as of June 23 on card accounts in dollars, euros, pounds sterling and Swiss francs. The service charge for such accounts was supposed to be 1% per month on balances over 1,000 units of the account currency, to be debited daily. The bank also said at the time that as of June 23 existing forex savings accounts would be closed and funds held in them would be transferred to current accounts on which commissions would be charged.

These actions, along with technical and regulatory restrictions on withdrawal of cash forex, caused an outcry among the bank's clients.

A number of other Russian banks also announced plans to introduce commissions on forex retail accounts. This practice was criticized by the Central Bank of Russia, which said it was unacceptable and issued an advisory to this effect.

Tinkoff Bank later backed away from its plan to impose a commission on accounts in dollars, euros, pounds sterling and Swiss francs of up to $10,000; the commission on accounts over this amount will be 1% per month as of June 23.

However, the bank worsened conditions for forex SWIFT transfers, raising the minimum amount of one transfer to $20,000 and introducing a commission for incoming transfers.

"For many years Russians have seen the dollar as one of the most reliable instruments for saving. Today the situation has changed. The dollar has stopped being a safe haven and is rapidly turning into a source of risk for depositors, but at the same time there are now more alternatives to savings in foreign currency," Bliznyuk said.

"In these conditions it is important for banks, which have been deprived of reliable instruments for safekeeping or investing the dollar and which are at the same time responsible to clients, to warn clients about the risks of 'unfriendly' currencies and help find better solutions considering the present day. Even if they draw fire on themselves when unpopular and fast decisions have to be made on forex products and SWIFT transfers in order to preserve their operation in principle," he said.

He noted the risks of Russian banks' correspondent accounts being blocked by western countries, recalling that banks make dollar payments through correspondent accounts at U.S. banks.

"Another side of the problem is that Russian banks have essentially been deprived of the ability to reliably invest their clients' dollars," Bliznyuk said. Russian banks have only three options for what they can do with dollar liabilities: keep them in a correspondent account at a U.S. bank, at an account with Russia's National Clearing Center or use them to lend to clients, he said, adding that the first two options are very risky.

He also said that possibilities for SWIFT transfers in Russia will narrow significantly. "There are already only a few Russian banks left in Russia at which clients can make transfers in dollars," he said.

"SWIFT transfers are made using western financial infrastructure and western partner banks are steadily tightening checks on Russians' payments and dramatically reducing available limits for the number of transfers. As a result, in the coming weeks the window of opportunity for SWIFT transfers in Russia will narrow significantly. Banks also have to adjust to these rules and change the terms of SWIFT transfers themselves in order to preserve the very possibility of making such transfers for clients. This is a graphic example that the dollars Russians are accustomed to are an instrument that is currently rapidly losing important elements of a means of payment," Bliznyuk said.