Tinkoff, an independent digital bank in Russia, has announced its decision to start charging a 1% monthly fee on some forex accounts held with the bank.
The service fee will be subtracted every month from accounts held in US dollars, Euros, GBP, Swiss francs and with over $1000 in balance.
Reuters reports that Tinkoff announced the decision on Thursday, noting that the decision will take effect from June 23.
According to the outlet, the bank has offered exchange rate incentives to its customers to move their forex holdings to rubles.
However, the bank said it will waive the commission for transfers made over the Society for Worldwide Interbank Financial Telecommunications (SWIFT) global payments system until June 30.
The online bank, which is a part of London-listed TCS Group Holding PLC, explained that financial institutions in Russia were constrained in holding foreign currencies as a result of the current geopolitical situation.
Additionally, the bank noted that only a paltry amount of its customers held amounts over $1,000.
“This is a forced measure. It is due to the unreliability of foreign partners in terms of foreign currency operations for Russia and is aimed at reducing Tinkoff Bank’s foreign currency positions,” Reuters quoted the bank as saying in a statement.
Moreover, the challenger bank said that similar measures would soon be taken for foreign currency held in brokerage accounts.
On top of that, Tinkoff disclosed that customers will only be able to open saving accounts in rubles from June 23.
Meanwhile, the Russian subsidiary of Raiffeisen Bank International (RBI), an Austrian banking group, has announced that it will start charging negative interest rates on some foreign currency holdings from June 30.
Negative Rates
The Central Bank of the Russian Federation in May said that it was giving thought to imposing negative rates on deposits held in US and European currencies.
The goal, according to the apex monetary authority, was to stimulate the use of other currencies.
The central bank said the action could affect the corporate clients of banks and not their retail account holders.
War and Finance
Tinkoff’s action and the idea of imposing negative rates one impact of Western sanctions on Russian financial institutions, as a result of Russia's war against Ukraine.
Also, Moscow Exchange, Russia’s largest exchange group, is feeling the heat.
Trading volumes in major markets of the exchange collapsed by significant numbers in May.
However, the markets of the exchange grew 5.2% from RUB 74.3 trillion in May 2021 to RUB 78.2 trillion last month, according to the latest monthly trading volume released by the exchange last Thursday.
Furthermore, Deutsche Bank, a leading German financial services provider, has reportedly relocated hundreds of Russia-based employees and their families to Berlin.
