Western Company and Bank Deposits Are Being Moved Out of Sanctioned Russian Banks to Foreign Bank Branches

It has been confirmed by a front page article earlier this week (October 6th) in the Financial Times that Western companies (presumably including banks) have been moving deposits out of sanctioned Russian banks, such as VTB and Sberbank, and transferring them to foreign banks domiciled in Russia (e.g., Societe Generale).  This fact was conveyed in the context of a story about Western banks trying to draw down their credit exposure to Russia as rapidly as possible in order to make their branches there entirely self-funding on the Russian bond market (about twice as expensive as normal funding sources).  This is important because Moscow has traditionally relied on Western interbank deposits in particular as a kind of cash reserve checking account for the government, if “rolled-over” at maturity repeatedly.  Tracking the pace of the movement of Western corporate and bank deposits out of Russian banks would likely provide a good indicator of potential liquidity crises down the road.