A ransomware attack struck the U.S. unit of China’s Industrial and Commercial Bank of China (ICBC) this week, causing disruptions in its systems. The incident, which occurred on Wednesday, reportedly affected liquidity in U.S. Treasuries, contributing to a brief market sell-off on Thursday.
ICBC Financial Services, headquartered in New York, confirmed the attack and assured that it had reported the incident to law enforcement. The unit is actively investigating the cyberattack and working on recovering from its effects.
In a statement, ICBC Financial Services reassured that it successfully cleared U.S. Treasury trades executed on Wednesday and repurchase agreements financing trades conducted on Thursday. The attack specifically impacted this U.S. unit, with the head office in Beijing and other domestic and overseas units remaining unaffected. The ICBC New York Branch was also unharmed.
As the largest of China’s “Big Four” banks and the world’s largest lender by assets, ICBC has drawn attention from global financial regulators. China’s Foreign Ministry mentioned that the bank has completed emergency handling and supervision to minimize risk impact and losses.
Regulators worldwide are closely monitoring the situation. The U.S. Treasury spokesman stated that they are aware of the cybersecurity issue and maintain regular contact with key financial sector participants and federal regulators. The U.S. Securities and Exchange Commission is monitoring the incident with a focus on maintaining fair and orderly markets, while the UK Financial Conduct Authority is communicating with relevant U.S. and UK authorities and firms to identify any impacts on UK financial services.
Reports suggest that trades passing through ICBC were disrupted, affecting market liquidity, and there is uncertainty about whether the incident played a role in the weak 30-year bond auction conducted by the U.S. Treasury on Thursday. Market analysts observed a sharp selloff in Treasuries after the auction, leading to increased yields for various bonds. The incident may have contributed to volatility, questions, and uncertainty, influencing the lower closure of the S&P 500, the Dow, and the Nasdaq on Thursday.
China, a significant player in the Treasuries market, holds $805.4 billion worth of Treasury securities as of August, making it the world’s second-largest foreign holder of U.S. Treasury bills after Japan. Ransomware attacks, a growing concern for national and economic security in the Biden administration, have globally disrupted company operations and key public services.