Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Bank of China Ltd. and Agricultural Bank of China Ltd., the nation’s four largest state-backed lenders, had a combined 7.5 trillion yuan (US$1.1 trillion) equivalent of US dollar liabilities at the end of 2019, of which 47% were deposits, according to their annual reports. The rest came from interbank borrowing and issuing securities to global investors.
The legislation would apply penalties against financial institutions only if a bank knowingly does business with an official under sanction. The bill is intended to keep the penalties from capturing a broad swath of US companies, an administration official familiar with the discussions said earlier. Banks will be informed of what entities are on the sanctions list before penalties are imposed, the person said.
Among Chinese banks, Bank of China had the biggest exposure to the US dollar with about US$433 billion of liabilities, followed by ICBC. Chinese lenders have been expanding their presence globally over the past decade by adding branches, making acquisitions and granting loans to fund everything from local power plants to toll roads.
Global banks could also be at risk since they may also have Chinese officials, their relatives and associates as customers, Chan said. Standard Chartered Plc paid more than US$600 million in fines in 2019 for breaching sanctions against Burma, Cuba, Iran, Sudan and Syria. BNP Paribas SA was fined US$8.9 billion by the US in 2014, the largest ever for an individual bank, for transactions with Sudan and other blacklisted nations.
See also: Hong Kong’s stock market booms with Wall Street in turmoil
The Trump administration overnight escalated pressure on China over its crackdown on Hong Kong by making it harder to export sensitive technology to the city, while lawmakers in Beijing on Tuesday approved the landmark security law. The Commerce Department said it’s suspending regulations allowing special treatment to Hong Kong over things including export license exceptions.
