Promsvyazbank, the Russian state bank that was hit by sanctions by the U.S., has lowered its security deposits that go to Visa and Mastercard, reported RT.com.
According to a report in RT.com, the move is being taken by converting domestic banking transactions to Russia’s payment system MIR, which it launched in 2015. That was a year after it was first hit by sanctions from the West, noted the report. MIR is accepted by Russian companies but is also gaining acceptance among international companies that have operations in the country,
Promsvyazbank President Pyotr Fradkov, as quoted by Russian business daily Vedomosti, said the bank has also lowered its foreign exchange holdings, reported RT.com. The report noted security deposits are often used to show lenders a bank can meet its debt obligations.
“We have carried out the necessary work with Visa and Mastercard. Our partners agreed with the measure and are ready to work with us in the same mode,” Fradkov told the media, according to the report. “We are not canceling work with Visa and Mastercard. There haven’t been any reasons for that yet. Security deposits are still presented in the payment systems, so we deliver on our commitments.”
The executive noted that deposits have been reduced to their minimums. He said the bank is setting up with MIR and its operator, Russian National Card Payment System. He said that foreign exchange assets at the bank fell to 6.8 percent from 17.5 percent and passive assets were lowered to 5.7 percent from 12.6 percent. Promsvyazbank, which was privately owned in the past, was saved by the Central Bank in Russia and then picked to service Russia’s defense sector, noted the report.
In August Visa and Mastercard were replaced on Russia‘s Crimean peninsula with the country’s biggest bank switching all credit cards to Russia’s MIR payment system from SWIFT, according to a report in RT at the time.