MTS-Bank opens a branch in the UAE
The credit institution has to wait for approval only from the Bank of Russia
MTS-Bank is going to open a branch in Dubai, so this could become the first branch of a Russian credit institution in the United Arab Emirates (UAE), Kommersant writes, citing its own sources. One of the interlocutors of the publication noted that the bank has already received permission from the UAE regulator and is now awaiting approval from the Russian Central Bank.
Russian banks very rarely open branches abroad. Sberbank has a branch in India, in the city of New Delhi, and plans to open another branch in that country next year, in Mumbai. VTB has two branches – in India and China. Promsvyazbank (PSB) had a branch in Cyprus, but last year it passed the local banking license and is now “implementing measures aimed at completing the operation of the branch and its subsequent closure.”
Russian banks open representative offices in foreign countries more often – now there are several dozen of them. For example, in the UAE (Abu Dhabi), Sberbank has a representative office. However, as one of the interlocutors of the publication noted, a representative office can only provide consulting services, while a branch has the right to banking operations, such as issuing loans, accepting deposits, maintaining accounts, managing assets, etc.
In addition, if MTS Bank has received permission from the UAE regulator, it will be able to open correspondent accounts in the currency of this country – dirhams – at the local central bank. A Kommersant source notes that opening a correspondent account with an ordinary local bank implies that any client payment can be analyzed, and also has the risk of being blocked. According to him, the presence of correspondent accounts in the Central Bank, “as a rule, guarantees the passage of the payment without questions.”
The interlocutors of the newspaper believe that MTS-Bank first of all plans to develop the settlement business in the UAE. Moreover, one of them believes that the opening of a branch of a credit institution in Dubai is being done “including in the interests of the AFK Sistema group.” Another source of the publication clarifies that “opening a branch is expensive, large banks can afford it, and for business efficiency it is necessary to have a large volume of operations.”
However, according to Kommersant, an exit to the UAE may be justified given the active growth in popularity in Russia of settlements in the currencies of friendly countries, including dirhams. As Business Standard wrote earlier, MTS Bank also wants to open an account in rupees with the Indian HDFC Bank.
MTS Bank is owned by the telecom operator of the same name (part of AFK Sistema), in which it has 99.8%. The credit institution was founded in 1993 and is now in the top 50 leading banks in Russia in terms of assets.