- According to the Vedomosti news agency, one of the main Chinese banks used by Russian importers has stopped all transactions with Russian companies.
- In response to secondary U.S. sanctions over Russia’s invasion of Ukraine, Chinese financial institutions are stepping up checks to ensure compliance.
- The Kremlin acknowledged the problem and said it was working with the Chinese government to resolve it.
Chinese banks seem uninterested in doing business with Russian companies.
Russian business media Vedomosti reported on Wednesday, citing three affected businessmen, that Zhejiang Zhouzhou Commercial Bank, one of China’s major banks used by Russian importers, All transactions have been suspended.
Vedomosti said bank customers were informed of the move last week.
Anonymous sources told Vedomosti that Russian companies are now worried about a “logistical collapse” if banks do not resume clearing payments after the week-long Lunar New Year holiday, which starts on Friday. It is said that there is.
Other Chinese banks are also increasing compliance checks when doing business with Russian companies, the media said.
The Kremlin acknowledged the issue, with spokesman Dmitry Peskov saying authorities were “working” with the Chinese government to resolve the issue.
“We are in close dialogue with our Chinese friends and, of course, we will resolve all issues that arise,” Peskov said at a press conference on Wednesday, according to AFP news agency.
The troubles with Russian and Chinese banks come weeks after the United States approved secondary sanctions in December targeting financial institutions that help Russia evade sanctions, leading to controversial trade restrictions. Its effectiveness has been proven.
Russian companies trading internationally have become increasingly dependent on Chinese financial institutions and the Chinese yuan. Some Russian banks withdraw from international financial messaging system SWIFT.
As a major energy exporter, Russia has managed to keep trade activity strong, so the Russian economy still appears resilient despite primary sanctions imposed by the West over the invasion of Ukraine.
But as Western countries tighten sanctions against Russia, Chinese companies are also trying to avoid trouble.
At least two Chinese state-owned banks have been ordered to review their Russian operations in response to new U.S. restrictions in December, Bloomberg reported on Jan. 16.
This is not the first time Chinese banks have stepped up compliance with Western sanctions.
In June, at least one major Chinese bank, the Bank of China, began restricting money transfers from Russia.
Zhejiang Zhouzhou Commercial Bank did not respond to Business Insider’s request for comment.