Financial institutions are wary of Washington’s penalties for dealing with Moscow, according to MSP Bank
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Some Chinese banks are rejecting transactions from Russian banks on fears of being targeted by US secondary sanctions, the deputy CEO of Russia’s MSP Bank, Aleksey Potapov, revealed on Thursday, citing customers.
He mentioned that some of his bank’s clients have been making payments to Chouzhou Commercial Bank in Chinese yuan. However, last December, having received money from the Russian bank, the Chinese lender began to send it back, Potapov said.
“We have to admit that some Chinese banks, fearing secondary sanctions, do return payments to our customers. This largely depends on the purpose of the payment and the company making the transaction,” he noted.
Chinese banks have primarily tightened control on servicing deals related to goods that are subject to US sanctions such as metals and computer components, according to the deputy CEO.
“We advise clients to invite their counterparties to open correspondent accounts in other Chinese banks that do business with Russian banks,” Potapov said.
READ MORE: Turkish banks closing Russian accounts – Vedomosti
Earlier this week, Vedomosti reported, citing several businessmen, that Chouzhou Commercial Bank had notified its clients that it had stopped providing financial services to Russian and Belarusian organizations.
Rosbank, a former Societe Generale subsidiary, confirmed to RIA Novosti that it had experienced problems with this particular Chinese lender, but noted that such difficulties will not have any significant impact on its cross-border transactions in yuan.
In December, US President Joe Biden signed an executive order enabling sanctions on foreign institutions that continue to deal with Russia. The regulation targets lenders outside US and EU jurisdictions that help Russia source sensitive items, which reportedly include semiconductors, machine tools, chemical precursors, ball bearings, and optical systems.
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