China's Largest Bank Refuses To Accept Yuan From Russia

The situation for the Russian Federation has deteriorated sharply.

China's largest bank ICBC, as well as three other credit institutions — China Citic Bank, Industrial Bank, Bank of Taizhou and Bank of China — have stopped accepting payments from Russia in yuan, sources in the Russian business community told Izvestia.

According to them, the situation worsened sharply at the end of March — about 80% of transactions began to be returned to the senders. Today, transferring yuan to China is a big problem, which is why the import of equipment in April was difficult, noted one of the publication’s interlocutors.

A small amount of payments are made through small Chinese financial institutions, another source said. But they are also beginning to follow the example of large banks and introduce restrictions, says Alexey Razumovsky, commercial director of the Impaya Rus company.

Payments going to China first hang for a long time, then the client is asked to fill out additional forms, a check begins, and then the operation is refused without explanation, Razumovsky said.

The information was confirmed by the General Director of the Business Council at the Chamber of Commerce and Industry (CCI) Alexey Egarmin. According to him, payments for industrial goods have become especially complicated, but payments for consumer products are still going through.

New restrictions are associated with the risk of secondary sanctions from the United States, reminds General Director of First Group JSC Alexey Poroshin. He emphasized: despite Russia’s friendship with China, Chinese banks are not going to enter into confrontation with Western regulators.

Problems with settlements began at the end of December 2023, after US President Joe Biden allowed the US Treasury to impose secondary sanctions against companies and financial organizations of third countries for cooperation with Russia.

At first, Chinese banks refused to accept payments from Russia in dollars because they were tracked by the United States. But already in January, several credit institutions refused to conduct transactions in yuan. Among them are Ping An Bank and Bank of Nongbo (ranked 13th and 15th in terms of capitalization, respectively).

The Bank of China also began requesting data on whether the operation is connected with the self-proclaimed “LPR”, “DPR”, Crimea, Iran, North Korea, Cuba or Syria. In addition, the bank clarified whether the sender or recipient of the payment is related to the Russian armed forces.

Against the backdrop of the risk of secondary sanctions, settlements with Russia were also limited by Türkiye and the UAE. At the same time, payments from Russia to Kazakhstan began to occur with delays of two to three weeks.