On June 20, 2024, it was news that the Russian bank Novikom, a subsidiary of the state corporation Rostec, became the first entity from that country with a presence in Cuba. Although several media reported on the opening of a bank branch in Havana, the information is false. In reality it is a representative office. The terms seem similar, but they do not have the same connotation.
The differences between a representative office and a bank branch lie in the functions and scope of operations that each can carry out.
Unlike a branch—which is an extension of the bank—the representative office focuses on promoting the bank’s products and services and offering administrative support (handling general customer queries). That is, it facilitates links and creates a link between the parent company (main bank) and clients in a specific region.
The bank branch performs common bank operations—deposits, loans, opening and managing accounts, processing payments and transfers—and is regulated similarly to the head office. Financial activities of this nature are not permitted in a representative office.
The powers of the office of the Russian bank Novikom in Cuba were established in the Extraordinary Official Gazette 32 from April 29, 2024.
Resolution 40/2024 specified that the representation license authorizes the Russian bank to manage, promote and coordinate correspondent agreements and business carried out by its parent company in freely convertible currency with financial entities and institutions established in the national territory.
The license granted prohibits “directly carrying out active or passive banking or financial operations of any kind in Cuba.”
In addition, it obliges the representative office to provide the Central Bank of Cuba with the data and information requested.
In the Gazette was also published Resolution 34/2024 that approved the request of Banco Bilbao Vizcaya Argentaria S. A. (BBVA) to close its representative office in Cuba, which dated from 2020.
A bank for businessmen, not for people
Press reports about the opening ceremony of the representative office held at the Meliá Cohiba Hotel emphasized the advantages for Russian businessmen who decide to invest in the island.
Cuban Vice Prime Minister Ricardo Cabrisas qualified the fact of “fundamental and decisive action” for the opening of the national market to foreign capital. According to declared The official told the press, the representative office of the Novikom bank is part of “Russia’s commitment to supporting its business community so that, in accordance with their interests, they participate in Cuba’s economic development plan until 2030.”
Cabrisas also assured that the Cuban Government is committed to offering incentives and facilities that encourage entrepreneurs who participate in the plan.
In a statementthe banking entity said that it plans to support the commercial and investment activity of Russian clients in Cuba based on the growth of cooperation between both countries.
«The prerequisite for the opening of the Novikom representative office in Cuba was its active activity in the region over the past eight years. The bank guarantees interaction between Russian and Cuban companies in the fields of tourism, transportation, air navigation, fuel and energy, among many others,” the statement explained.
Elena Georgieva, president of the Russian bank Novikom, declared that it is not only a new stage for the bank, but an important step in Russian-Cuban relations. “I am sure that our experience in effective banking services for high-tech companies will be useful in financing promising Russian projects in the republic and ensuring payments between our countries,” he said.
Will there be Russian bank branches in Havana?
Following the news of the opening of the representative office, in a cluster On Facebook of Cubans in Russia, several people said that, with the inauguration of the bank, the business of remittance scams would end.
Erroneously, users considered that they could send money directly to their relatives through the Novikom bank.
The middle Reportur He also incorrectly indicated that from now on payments for Russian tourists would be facilitated.
Although the scope of the representative office is limited for tourists and people in general, the opening is a first step in strengthening interbank cooperation, said Serguei Baldin, head of the representative office in Cuba.
In March 2023Boris Titov, president of the Russia-Cuba Business Council, reported that (in conjunction with Cuban interest) three Russian banks requested authorization from the Central Bank of Cuba to open branches on the island.
Oleg Savchenko, Deputy Chairman of the Committee on Financial Markets of the State Duma, also said on that occasion that the creation of joint Russian-Cuban banks in Cuba is planned to finance MSMEs operating on the island.
The Cuban authorities are interested in opening branches of Russian banks on its territory, said In March 2024, the former Minister of Foreign Trade and Foreign Investment of the Republic, Ricardo Cabrisas, during the XXI meeting of the Russian-Cuban Intergovernmental Commission for Commercial, Economic, Scientific and Technical Cooperation.
The expansion of Russian banking and financial entities in their allied countries is an alternative to the sanctions of the United States and the European Union on Russian banks for their involvement in the war in ukraine.
“It is important because both the Russian Federation and Cuba, under conditions of unilateral coercive measures, need a banking system that works with this country,” emphasized Ricardo Cabrisas during the opening ceremony of the Novikom representative office in Havana.
According to Panama Postthe measure aims to hide Russia’s financial crisis and facilitate transactions with Russian companies on the island.
The expansion of Russian financial systems in Cuba began with the authorization in 2023 of the use on the island of the Russian Mir card, an alternative to Visa and MasterCard, blocked for that country after the invasion of Ukraine.
Currently, people with a Mir card can withdraw national currency at the current exchange rate in the ATM network and pay for goods and services through point of sale terminals (POS).
According to Juan Carlos García Granda, Minister of Tourism in Cuba, from the beginning of its use in December 2023 until March 2024, operations had been carried out with the Mir worth 2.7 million dollars.
