Chinese and Singapore Banks Limit Financing for Russian Commodities
(2 March 2022 – Asia) Several Chinese banks including ICBC and Bank of China are limiting financing to purchase raw materials from Russia for fear of Western sanctions following the invasion of Ukraine.
DBS, OCBC and UOB have also stopped issuing letters of credit in US dollars for trades involving Russian commodities and energy deals including oil and liquefied natural gas.
A choke on trade financing in a top commodities hub such as Singapore could snarl the trade of some physical cargoes and add further pressure to prices, even though the United States and European Union sought to exclude energy from the latest round of new sanctions.
Currently, about 30 percent of Russian oil and gas are sold to China. The decision was taken for fear that allowing funding could be perceived as support for Moscow's invasion and risk sanctions from the United States and its allies.
“DBS will comply with all applicable sanctions,” the bank said. “Separately, we have minimal direct exposure to Russia, and consistent with our risk management obligations, have adjusted appetite for transactions consuming Russian exposure limits.”