- Russian oil firms are waiting months to receive payments from trade partners, Reuters reported.
- But secondary sanctions fears are keeping foreign banks from transacting with Moscow.
- To trade with China, Russian firms are flocking to the only bank with a full-fledged Chinese branch.
The threat of secondary sanctions has put off a number of foreign banks from transacting with Russia, and has created months-long delays in payments received by Russian oil firms, Reuters reported.
The trend encompasses lenders in China, a country that remains one of Moscow's leading oil buyers ever since Western sanctions were first launched against it in 2022. Trade with Beijing grew so close that 90% of Russian banks held accounts in Chinese counterparts by the year's end.
But despite the nations' close ties, Chinese banks have been halting yuan transactions with Russia over past weeks, which the Kremlin has blamed on US pressure.
Now, the easiest way for China to pay Russian companies is through a Russian lender that has a Chinese branch, sources told Reuters. That's put a spotlight on VTB Bank, the only dealer to fit that description in the country, the outlet said.
Russian companies are thronging to create accounts with the institution, and demand has been so high that a bottleneck has formed. Some firms are sitting out as long as six months to join the bank.
"The only (Russian) bank branch open in China is not that big and recently they've had quite serious delays with processing documents," a source told Reuters anonymously.
Meanwhile, even if an account is open, companies on China's side may not always willing to transact through VTB.
In large part, this skepticism in transacting with Russian entities emerged after a US executive order gave the Treasury Department freedom to sanction Russian-friendly dealers. Apart from China, that's impacted banks in Turkey, the United Arab Emirates, and even Austria.
While these actions have taken a toll on Russia's oil trade, the country's energy tax revenue recently rebounded in March.