China State Banks Restrict Financing for Russian Commodities

[Wicked Blue]

Bloomberg News
Fri, February 25, 2022, 10:07 AM·3 min read

(Bloomberg) -- 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.

Bank of China Ltd. has also curbed financing for Russian commodities based on its own risk assessment, another person said. The lender has yet to receive explicit guidance on Russia from Chinese regulators, two people said.


https://finance.yahoo.com/news/chinese-state-banks-restrict-financing-144352036.html

[C_U_L8R]

1. Et tu, China?

Putin really has no friends in the world. C'mon March.

[kysrsoze]

2. I guess Xi is now concerned about his public image... or at least his country's finances.

[GoCubsGo]

3. I was wondering how much of an alliance there actually was between these two.

I've been skeptical that it was anything other than appearances, at least on China's side. Of course, Xi was probably just dipping his toe in the water, and waiting to see how the West reacted to Putin's machinations. I think he just pulled it out, is drying off his toe, and about to put his shoe back on.

[hunter]

4. In recent years the "bread basket" of the Soviet Union has been sending more grain to China...

... and less to Russia. That had to be a major insult to Putin.

Ukrainian trade with China overall was increasing rapidly as well, mostly at the expense of Russia.

Putin had some influence over European trade, with Europe so dependent on Russian fossil fuels, especially natural gas, but I suspect the Ukranian-Chinese relationship scared the shit out of him.