Potential Ransomware Attack on China's Largest Bank Raises Concerns for US Treasury Market
A ransomware attack on the US unit of China's largest bank, ICBC, caused system disruptions, potentially impacting liquidity in US Treasuries This incident may have contributed to a brief market sell-off on Thursday
Sign up for CNN's Meanwhile in China newsletter to stay updated on the country's rise and its global impact. Recently, an American branch of the Industrial and Commercial Bank of China (ICBC) experienced a ransomware attack. This cyber attack caused disruptions in their systems, potentially affecting liquidity in US Treasuries. The incident may have played a role in a brief market sell-off on Thursday.
ICBC Financial Services, based in New York, reported that a cyberattack on Wednesday had been notified to law enforcement. The incident is currently under investigation, and efforts are being made to recover from the attack.
According to a statement, the organization successfully resolved US Treasury trades conducted on Wednesday and repurchase agreements financing trades conducted on Thursday.
The incident did not impact the systems of ICBC's head office in Beijing, as well as other domestic and overseas units, including the ICBC New York Branch, the unit clarified.
State-owned ICBC, China's largest bank and the world's largest lender by assets, has taken immediate action to address the incident, according to China's Foreign Ministry. Ministry spokesperson Wang Wenbin stated during a press briefing that the bank has successfully implemented emergency measures and closely monitored the situation in order to minimize potential risks and losses.
Trades conducted through ICBC were reportedly disrupted, impacting market liquidity. It remains uncertain if this incident had any influence on the lackluster 30-year bond auction carried out by the US Treasury on Thursday. Following the auction, there was a significant decrease in demand for Treasuries, as noted by Ipek Ozkardeskaya, senior analyst at Swissquote Bank, who observed a rise in yields for various bond types.
"The surge in US yields adversely affected investor sentiment in US stocks yesterday," she remarked. "The US bond auction triggered a significant amount of market volatility, raised numerous questions, and created a sense of uncertainty."
On Thursday, the S&P 500, the Dow, and the Nasdaq all concluded the day with losses.
China is a significant player in the Treasuries market, currently holding $805.4 billion worth of Treasury securities as of August, according to the latest data from the US Treasury Department. It ranks as the second-largest foreign holder of US Treasury bills globally, just behind Japan.
Ransomware attacks have had a disruptive impact on company operations and essential public services worldwide. This has now generated a considerable concern for the national and economic security of the Biden administration.
CNNs Wayne Chang and Reuters contributed reporting.
