Chinese banks halt yuan payments from Russia over sanctions concerns

Major Chinese banks have stopped accepting yuan payments from Russia, effectively blocking transactions, with funds being returned to customers in the Russian Federation. According to the Russian publication Izvestia, Chinese banks and financial institutions have begun to massively block yuan payments from Russia due to fears of Western sanctions.

At least eight credit institutions have declined Russian payments, according to reports. These include major banks like Ping An Bank and Bank of Ningbo, which rank 13th and 15th in capitalization, as well as Great Wall West China Bank, Dongguan Rural Commercial Bank, China Guangfa Bank, Kunshan Rural Commercial Bank, Shenzhen Rural Commercial Bank, and China Zheshang Bank.

Yuan payment blockages have been occurring since mid-January this year. It is believed that the new restrictions are driven by fears of secondary sanctions and pressure from the United States.

The refusal to accept yuan payments will complicate transactions for Russian companies. However, Russian financiers suggest alternative ways to continue settlements, such as through a Russian bank whose payments are still accepted in China, by opening a company branch within China or another “friendly” country, or through partners in Hong Kong.

Previously, Chouzhou Commercial Bank, the main bank for Russian importers in China, informed its clients that it would halt transactions with Russia and Belarus, regardless of the payment system used.

Officially, China has not joined sanctions against Russia in response to the war in Ukraine. However, following the enforcement of restrictions, Chinese banks have reduced dealings with sanctioned Russian clients.

In other news, Emirates NBD, the leading state bank of Dubai, recently tightened business operations with Russian nationals. It has closed its Russian branch, as well as a significant number of large Russian accounts associated with sanctioned individuals. Moreover, the bank has ceased accepting ruble transfers and payments.

  China, Russia