Belarusian subsidiaries of Russian banks in 2015 faced with a growing number of depositors from Russia. “The volume of contributions of Russians increased by 28% in dollar terms, says the head of the press service of Alfa-Bank (Belarus) Vitali Zagoskin. — The most noticeable was the growth in the end of the year: from mid-November until January 1, 2016”.
In subsidiary Bank Gazprombank Belgazprombank in the last three months the volume of funds deposited by Russian citizens has increased by 30%, says Deputy Chairman of the management Board of Belgazprombank Sergei Shaban. At BPS-Sberbank (the Belarusian “daughter” of Sberbank) noted a moderate growth rate of deposits of non-residents from April 2015, said the representative of the press service of the Bank.
The increased interest in Belarusian deposits of the banks by the Russians persisted and in this year, says Zagoskin. It’s a great rates on foreign currency deposits. “On deposits in dollars and euros at present rates reach 5% per annum when placed on two years,” says Zagoskin.
According to infobank.by the average annual yield of deposits in dollars and euros into Belarusian banks is 3.5–4% per annum. For comparison, according to the research company Frank RG, the average maximum rate on deposits top 10 Russian banks is 2.7% in dollars and 1.8% in euros.
According to Zhaholkina, because of high interest rates in Belarusian banks and money placed citizens of European States. Rates in Russian rubles, deposits which can also be opened in Belarus, Russian is slightly higher. If the average maximum rate of the ten largest Russian banks is 9.6% (data of the Central Bank of the Russian Federation), in Belarus — 11% (data infobank.by).
The higher rates are attributable to higher than in Russia, key interest rate (25% instead of 11% in Russia) and greater need of the Belarusian economy in the currency. “The Belarusian economy is dollarized stronger than the Russian one, the demand for currency at the Belarusian companies”, — explains the head of the Department of research and analysis of Belarusian investment company “UNITER” Dmitry Kirilenko.
In addition to the high profitability of deposits in Belarusian financial system has several other advantages compared with Russia, says the head of the infobank.by Vyacheslav Bykovsky. Open deposits in four currencies — local and Russian rubles, dollars and euros. And all these deposits are protected by Deposit insurance system.
Since 2008 the country has a law “On guaranteed refund of Bank deposits (deposits) of physical persons”. Unlike the Russian mechanism that returns the deposits to 1.4 million rubles, Belarus has no limits. The Agency for guaranteed compensation of Bank deposits (deposits) of physical persons in case of revocation of the license of the Bank shall reimburse all funds from the Deposit in the currency in which the Deposit account was opened,” explains financial adviser of consulting group “Personal capital” Vitaly Runco.
According to the official website of the National Bank of the Republic of Belarus, the country has 28 commercial banks. Over the last ten years, the country went bankrupt just two banks, says Kirilenko. He noted that last year went bankrupt Delta-Bank Ukrainian businessman Nikolay Lagun. “It was an unprecedented event for Belarus. There were fears, work as a system of Deposit guarantees. But it worked as expected: all depositors-natural persons have paid all the funds,” says Kirilenko.
How to open a Deposit account in a Belarusian Bank
Russians can open deposits in Belarusian banks on the same terms as the citizens of Belarus. But directly from Russia will not work. To open Deposit account at least once to personally visit any Bank with your passport and submit the application.
Some banks allow you to control the Deposit account (to transfer money, including interest, after the expiration of Deposit) through Internet-Bank. According to infobank.by the possibility is only ten banks.
“If you plan to solve everything in one visit, it should be noted that the urgent issuance of the card takes approximately five hours with an additional payment for urgency from $10,” warns Vitaly Runco.
The minimum Deposit amount depends on the Bank. For example, in Alfa-Bank (Belarus) it is 100 dollars or Euro, 7 thousand Russian rubles or 500 thousand Belarusian rubles. In “VTB Belarus” — the same 100 dollars or euros and 6 thousand rubles In the BGB to open a Deposit in foreign currency can in the amount from 50 dollars and euros, 5 thousand Russian rubles and 1 million rubles.
Until recently, income on deposits in Belarusian banks were not taxed. However, from 1 April 2016, the country shall enter into force provision of the decree No. 7 of President Alexander Lukashenko, “On the attraction of money in deposits”, providing for the levy of income tax on interest income on deposits. As in Russia it is 13% of income. The tax will be levied as from investors-residents and non-residents. Tax agents will be the banks themselves, i.e. the depositor will not have to report to the tax authorities.
“Income tax, of course, will lower the real yield on the Deposit, but not critical, — says Vitaly Zagoskin. — For example, placing $10 million per year, the amount of income is $500 and tax is $65”.
For Russians, the introduction of a tax could create further communication with the Russian tax authorities. Belarus is a foreign government, so the Russians are obliged to notify the Federal tax service about the opening of accounts in its territory. With the new year, Russians are obliged to pay personal income tax on income on deposits in foreign banks, reminds the partner Paragon Advice Group Alexander Zakharov. However, between Russia and Belarus signed an agreement on avoidance of double taxation. And not to pay fees even at home, the Russian taxpayer will have to document the collection of the tax in Belarus and to make the deduction, warns Zakharov.
Another caveat: under the agreement on double taxation Belarusian tax rate, which is reckoned Russia, is a maximum of 10%. Thus, the remaining 3% will still have to pay the Russian Treasury, the Director of the group on rendering of services in the field of HR management and taxation of individuals, KPMG in Russia and the CIS donut Podniek.
Tax in Belarus will be levied only on deposits with term less than two years, when it comes to foreign currency deposits. Also in accordance with the decree, the deposits will be divided into two types: revocable (can be picked up ahead of time) and irrevocable (can be picked up only after the contract expires). Rates on revocable deposits will be significantly lower. For example, in Alfa-Bank (Belarus) on irrevocable deposits in the currency rate reaches 5%, revocable — 3.75% per annum. The table shows the rates on irrevocable deposits.
Another problem for Russian investors in Belarus — restrictions on the management of deposits. “Full remote control input (opening, updating, closing and) is possible only for the online deposits, and their rates can also be lower. For example, “ON-Deposit” BGB rate is 3.5% per currency and 7.5% in rubles. Rate on the Deposit “Выше.NET” Priorbank is 3.75% in dollars and euros,” says Mr Renzo.
To replenish the Deposit without fee is possible only by credit card or from account opened in the same Bank. In turn, for the transfer of funds from a Russian Bank to your Bank in Belarus it is necessary to pay a Commission to the Bank for the transfer and Belarusian for enrollment.
Worth to use
Dmitry Kirilenko believes that the Russians can choose any one of the Belarusian banks, including small. “Thanks to the system guarantee you can not to worry about the safety of the funds and to choose Bank with more favourable conditions. However, the Russian experts advise to weigh the risks before opening Deposit in a neighboring state.
Over the last few years, Belarusian banks have repeatedly experienced a shortage of currency and introduced temporary limits on its withdrawal, says chief economist of “Renaissance Capital” Oleg Kuzmin. In case of a serious crisis they can use these methods to protect the banking system. “Physical distance in this case will play against the Russians, agrees Runco. — Issuance of foreign currency deposits in difficult times, by prior application to the Bank in person for a few days.”
Another risk — change legislation. “The political system of Belarus is close to authoritarianism. In the event of an economic crisis can be quickly taken to limit the rights of investors. For example, to restrict the circulation of currency or the introduction of a fixed rate”, says partner UFG Wealth Management Dmitry Klenov.
“In absolute numbers, the difference is 2.5% on the Deposit for a period of one year in the amount of $10 thousand will be $250, which barely will pay for the cost of travel to Belarus and back taking into account elapsed time”, — sums up Runco.