US sanctions loom over banks with China connections: Fitch

TIL Desk/Business/London/ Chinese banks and international non-US banks with connections to China could become ensnared in processes leading to US sanctions, Fitch Ratings has said in a new report.

In the coming weeks, the US administration must initiate a process that will result in the submission to Congress of a list of foreign financial institutions deemed to have engaged in significant transactions with parties that have allegedly sought to undermine Hong Kong’s autonomy.

“However, we do not expect material sanctions against systemic Chinese banks given the likelihood of retaliation from the Chinese state and the ensuing risk to bilateral trade and investment,” said Fitch.

Large non-US banking groups with meaningful footprints in China or Hong Kong including HSBC and Standard Chartered are reviewing potential escalation scenarios.

US sanctions on Chinese or Hong Kong-based individuals, some of which are already underway, could lead to reputational risk for banks, said Fitch in the report.