(June 30): China’s largest banks have US$1.1 trillion ($1.53 trillion) in dollar funding at stake and face potentially steep fines from US legislation that targets penalizing lenders doing businesses with Chinese officials involved in Hong Kong’s controversial security law, according to Bloomberg Intelligence.
The bipartisan measure, which was passed by the US Senate and still needs to go through the House and be signed by the US President, bars financial institutions from providing accounts to sanctioned officials, many of whom may be assumed to use the services of China’s biggest banks, Francis Chan, a senior analyst at BI in Hong Kong, said in a June 30 note. Banks in violation risk being cut off from accessing the US financial system, he said.
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.