US-sanctioned Russian giant Alfa Bank expands in China

Facing Western sanctions, Russia’s largest privately owned bank, Alfa Bank, is expanding its operations in China, the world’s second-largest economy.

Alfa Bank, which is controlled by sanctioned Russian oligarch Mikhail Fridman, announced earlier this week that it has launched a website and support service in Chinese for businesses operating in the country.

The bank also revealed plans to open branches in Beijing and Shanghai, according to a statement issued on Tuesday. This move will make Alfa Bank the first private Russian bank to establish full-service branches in these major Chinese cities. The expansion, initially announced in September, aims to facilitate more efficient business interactions between Russian clients and China.

In a February statement, Alfa Bank highlighted that developing relations with China is a key strategic focus. Alfa Bank is part of Alfa Group, one of Russia’s largest financial and investment conglomerates, founded by Fridman. Following Russia’s invasion of Ukraine in February 2022, both the United States and the European Union imposed sanctions on the group and its associated individuals as part of their broader punitive measures against Moscow.

These sanctions severely impacted Russian banks. Alfa Bank reported a loss of 117.1 billion rubles ($1.44 billion) in 2022, according to its annual report. However, the bank rebounded in 2023, posting a profit of 120.9 billion rubles ($1.4 billion).

China, while claiming neutrality on the war, has strengthened its ties with Russia across various sectors. Last year, trade between the two nations reached a record $240.1 billion, marking a 26% increase from 2022, based on Chinese customs data.

Additionally, the two countries have significantly reduced their reliance on the US dollar, with about 95% of mutual payments in 2022 being made in Russian rubles or Chinese yuan, according to a senior Russian official during a November visit to Beijing.

At the Group of Seven summit in Italy last week, the US and its allies accused China of supporting Russia’s war efforts. G7 leaders also threatened further sanctions against Chinese entities they claim are aiding Russia in circumventing Western embargoes.

In its Tuesday statement, Alfa Bank mentioned that it is already collaborating with “thousands” of Chinese companies and has received a strong rating from a prominent Chinese credit rating agency. The Hong Kong Equity Investment Association also recognized Alfa Bank as the “most technologically advanced” lender.