This week, a ransomware assault targeted a US branch of the Industrial and Commercial Bank of China (ICBC), disrupting some of its systems and perhaps impacting US Treasury liquidity, which might have played a role in Thursday’s brief market sell-off.
The incident occurred on Wednesday, and ICBC Financial Services, a New York-based company, reported it to the police in a statement. It was looking into what happened and attempting to get over the hack.
The statement read, “We successfully cleared US Treasury trades executed on Wednesday and [repurchase agreements] financing trades done on Thursday.”
Cyber extortion takes the form of ransomware attacks. The offender demands money after locking up the victim’s networks or data.
According to the unit, this event had no effect on the systems of ICBC’s Beijing main office, other domestic and international units, or the ICBC New York Branch.
According to S&P Global, state-owned ICBC is the largest of China’s “Big Four” banks and the largest lender globally in terms of assets. China’s Foreign Ministry stated on Friday that the bank was closely monitoring the situation.
In an attempt to reduce risk effect and losses, it “has completed emergency handling and supervision,” ministry spokeswoman Wang Wenbin said reporters at a routine news briefing.
Along with federal regulators, we are in constant communication with important players in the banking industry and are aware of the cybersecurity threat. We keep an eye on the issue,” a Treasury spokesperson stated.
According to an agency spokeswoman, the US Securities and Exchange Commission “continues to monitor with a focus on maintaining fair and orderly markets” and is also aware of the occurrence.
“Communicating with the relevant US and UK authorities and firms to identify any impacts to UK financial services,” stated a UK Financial Conduct Authority representative.
According to certain market players cited by the Financial Times and Reuters, deals processed by ICBC experienced disruptions that had an impact on market liquidity. It’s unclear if the event had any bearing on the US Treasury’s lacklustre 30-year bond auction on Thursday.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, stated in a letter to clients on Friday that there was a “sharp selloff” in Treasuries following the auction, noting that yields increased for a variety of bonds.
On Thursday, the Dow, the Nasdaq, and the S&P 500 all finished down.
“Yes, yesterday’s abrupt increase in US yields affected investor appetite for US equities,” she stated. There was a great deal of volatility, uncertainty, and uncertainties around the US bond auction.
The 30-year auction’s poor performance, according to Peter Cardillo, chief market economist at Spartan Capital Securities, may have been influenced by the ransomware assault. The assault may have made it more difficult for the bank to process trades, caused reroutes, which would have affected Treasury market liquidity and the speed at which an asset could be traded.
In the Treasury market, China is a significant participant. China held Treasury assets valued at $805.4 billion as of August, according to the US Treasury Department’s most current statistics. After Japan, it is the second-largest foreign holder of US Treasury notes globally.
Ransomware attacks have caused major disruptions to public services and commercial operations worldwide. The government now views the matter as a national security and economic security priority.