2 Chinese Banks Restrict Financing for Russia

China State Banks Restrict Financing for Russian Commodities
ICBC stops issuing letters of credit after Ukraine invasion
China’s top banks have complied with previous U.S. sanctions


At least two of China’s largest state-owned banks are restricting financing for purchases of Russian commodities, underscoring the limits of Beijing’s pledge to maintain economic ties with one of its most important strategic partners in the face of sanctions by the U.S. and its allies.

Industrial & Commercial Bank of China Ltd.’s offshore units stopped issuing U.S. dollar-denominated letters of credit for purchases of physical Russian commodities ready for export, two people familiar with the matter said. Yuan-denominated letters of credit are still available for some clients, subject to approvals from senior executives, the people said, asking not to be identified discussing private information.

The move followed Russia’s invasion of Ukraine, which triggered a wave of sanctions from countries including the U.S., the U.K. and Japan and stoked speculation that more may follow. Because commodity-linked letters of credit are issued so frequently, they would be among the first transactions impacted by the threat of sanctions.