OREANDA-NEWS. November 21, 2014. Sberbank has become the first Russian bank to launch financing of letters of credit in Chinese yuan (CNY), a new product.

This was a complex transaction under which a number of yuan letters of credit were issued on the instruction of a major corporate client. An important aspect of these transactions is that post-import financing was attracted in CNY, which is especially relevant given the existing market environment. The completion of these transactions in Chinese yuan allowed the client to not only meet its current financing and settlement needs, but also to continue actively cooperating with Chinese suppliers.

Letters of credit are traditionally considered the most secure form of settlement and a convenient instrument for financing foreign trade deals. For the buyer a letter of credit serves as a good alternative to an advance and guarantees the buyer’s solvency to the supplier. The seller, on the other hand, can be confident that timely payment will be made for the shipped goods or services provided. At the same time, both counterparties are protected from the risks that arise when working with new partners.

Sberbank uses all its capabilities to ensure successful implementation and financing of foreign trade transactions of its clients, including by broadening cooperation with financial institutions in China, the Middle East, South Korea and Singapore.

“We are witnessing a positive trend of strengthening partnerships with Chinese banks, especially after the signing of a number of agreements at the APEC summit in Beijing this November. Currently we are seeing growth in Russian companies’ interest in settlements using national currencies, in particular Chinese yuan, and of course, Russian roubles,” commented Andrei Ivanov, Head of Sberbank CIB’s Trade Finance and Correspondence Relations Division. “Sberbank’s trade finance instruments allow clients to complete settlements and receive financing in the currencies that best suit them.”