Reports: increase in restrictions imposed by Chinese banks on Russia.

According to informed sources cited by Bloomberg, the report indicated that Chinese state banks intend to tighten restrictions on financing Russian clients, following the imposition of secondary sanctions by the United States on foreign financial companies that support Moscow’s involvement in the conflict in Ukraine.

Bloomberg indicated that there are individuals who refused to disclose their identities and confirmed that at least two banks have issued instructions to review their Russian operations in the past few weeks, with particular focus on agreements and transactions conducted across borders.

People have reported that banks will stop communicating with customers who are on the sanctions list, and they will also prohibit providing any financial services to the Russian military sector regardless of the currency or location of the banking transaction.

Chinese lending institutions are conducting increased audits on their clients to verify whether their institutions, accredited beneficiaries, and ultimate beneficiaries are registered in Russia.

Sources have also confirmed that non-Russian clients conducting business in Russia or supplying essential goods to Russia through a third country will be examined.

In December, the US Treasury Department threatened to impose secondary sanctions on banks that support Russia in executing transactions to purchase defense equipment.

This refers to both past transactions and future violations. Such institutions will be prohibited from opening correspondent accounts in the United States or restrictions on their use. Their assets will also be banned in the United States.

The Russian authorities expressed their refusal to comment on the report that was issued on Tuesday, describing it as “a very sensitive subject”. When asked about it, Dmitry Peskov, the Kremlin spokesperson.

Pointed out that:

“China remains an important strategic partner for Russia, and they continue to develop their relationship.”

Last year, four major Chinese banks provided billions of dollars to Russian banks, as part of Beijing’s efforts to enhance the yuan as a global alternative currency to the dollar, according to a report published by “Financial Times” in September last year.

According to the report by the Central Bank of Russia, the total exposures to Russia of Industrial and Commercial Bank of China, Bank of China, China Development Bank, and Agricultural Bank of China increased from $2.2 billion to $9.7 billion over a period of 14 months until March 2023, with assets of Industrial and Commercial Bank of China and Agricultural Bank of China accounting for $8.8 billion of the total assets.

At the same time, the Austrian bank “Raiffeisen”, which is considered the most exposed foreign bank to the Russian market, increased its assets in the country by over 40%, from $20.5 billion to $29.2 billion. The bank announced that it is exploring ways to withdraw from the country, as it has reduced its assets to $25.5 billion since March 2023.

The movements of Chinese banks are part of Russia’s shift towards using the Chinese yuan as a reserve currency instead of the US dollar or the euro.

The rise in yuan trading highlights Russia’s economic relationship with China, as trade between the two countries reached a record high of $185 billion in 2022. Transactions between

The two countries using the yuan increased from 1% before the Ukraine war to about 16% in the fall of last year.