Russia's Sberbank has reported a surge in the volume of trade finance business written by the bank.

One driver of the surge is the increasing use of domestic letters of credit (L/Cs) for transactions between Russian buyers and sellers, according to the bank's global head of trade finance and correspondent banking.

Strong growth

Andrey Ivanov says that in the first half of 2013, the volume of new trade finance operations at Sberbank increased by 60% compared with the same period last year and amounted to US$5billion.

The existing trade finance transactions portfolio was in excess of US$12.5billion at 1 July 2013 compared to US$8.2billion a year earlier.

Domestic L/Cs

The bank had seen significant growth in servicing trade transactions within Russia during the year according to Ivanov.

He said the volume of settlements using domestic L/Cs in such transactions increased by a massive 120 per cent compared with the previous year and exceeded the equivalent of US$1billion.

Legislative change

"A growing interest of Russian companies in L/Cs along with a sustained increase in transaction volumes serve as evidence of a steady trend of switching domestic trade to civilised forms of settlements," according to Ivanov.

The banker claims Sberbank is taking a lead in this process, with its trade finance and correspondent banking experts actively involved in making amendments to Russian legislation with the aim of bringing the practice of using L/Cs in the domestic market up to the best world standards.

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