ICBC ransomware attack triggers global regulator, trader scrutiny
Global Regulators and Traders Assess Impact of Ransomware Attack on China’s Biggest Bank
By Harry Robertson and Yoruk Bahceli
LONDON (Reuters) – Global regulators and bond traders were on Friday trying to gauge the impact of a ransomware attack on the Industrial and Commercial Bank of China (ICBC), China’s biggest bank, that disrupted trades in the vital U.S. Treasuries market this week.
ICBC’s U.S. arm was hit on Thursday in the latest of a string of ransomware attacks this year that have targeted companies around the world.
China’s foreign ministry said on Friday that ICBC was trying to minimise the risk impact and losses after the attack, which a number of experts attributed to hacking group Lockbit.
Meanwhile, Britain’s Financial Conduct Authority said it was “communicating with the relevant U.S. and UK authorities and firms to identify any impacts to UK financial services”.
China’s foreign ministry spokesperson Wang Wenbin said that business remained normal at ICBC head office, other branches and subsidiaries across the globe.
“ICBC has been closely monitoring the matter and has done its best in emergency response and supervisory communication,” Wang told a regular news conference.
Some market participants said trades going through ICBC were not settled due to the incident and that market liquidity had been affected. It was not clear whether this contributed to the weak outcome of a 30-year bond auction on Thursday.
Traders and portfolio managers in Europe on Friday said bond markets appeared to be functioning normally.
“Some illiquidity can be blamed on the U.S. Treasury inter dealer broker market around the time of the hack and post-auction,” said one fixed income manager at an asset management firm in Europe.
But the investor said market moves were hard to disentangle from a bond sell-off after comments from Federal Reserve Chair Jerome Powell and the fallout from the poorly received auction.
ICBC said it had successfully cleared Treasury trades executed on Wednesday and repurchase agreements (repo) financing trades done on Thursday.
Since Lockbit was discovered in 2020, the group has hit 1,700 U.S. organizations, according to the U.S. Cybersecurity and Infrastructure Security Agency.
While market sources said on Thursday the impact of the ICBC hack appeared limited, the attack underlined how vulnerable systems at large organizations continue to be.
The yield on the 10-year U.S. Treasury note , which sets the tone for borrowing costs around the world, was last down 3 basis points at around 4.59%. It rose 11 basis points on Thursday, with yields moving inversely to prices.
ICBC’s Hong Kong-listed shares ended Friday down 0.8% compared to a 1.13% drop in a Hong Kong index of mainland Chinese banks. (.HSMBI) Its Shanghai-listed shares closed flat. (601398.SS)
Reporting by Harry Robertson in London, Yoruk Bahceli in Amsterdam; Editing by Dhara Ranasinghe and Alexander Smith
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What measures is ICBC taking to minimize the risk impact and losses following the ransomware attack? How are global regulators and bond traders collaborating to assess the potential impacts on UK financial services?
Global regulators and bond traders are currently assessing the impact of a recent ransomware attack on the Industrial and Commercial Bank of China (ICBC), the largest bank in China. This attack disrupted trades in the vital U.S. Treasuries market, leading to concerns about the security of global financial systems.
ICBC’s U.S. arm was targeted in the ransomware attack on Thursday, adding to the string of attacks that have plagued companies worldwide throughout the year. The Chinese foreign ministry has stated that ICBC is working to minimize the risk impact and losses following the attack, with experts attributing the incident to the hacking group Lockbit.
In response to this situation, the Financial Conduct Authority of Britain expressed its commitment to collaborating with relevant U.S. and UK authorities and firms to assess any potential impacts on UK financial services. Meanwhile, the Chinese foreign ministry spokesperson, Wang Wenbin, assured that ICBC’s head office, branches, and subsidiaries across the globe are operating normally. He further emphasized that ICBC has been closely monitoring the situation and has implemented emergency response measures and supervisory communication.
Market participants have reported that trades conducted through ICBC were not settled due to the incident, thereby impacting market liquidity. It remains unclear whether this contributed to the weakened outcome of a 30-year bond auction held on Thursday. However, traders and portfolio managers in Europe have commented that bond markets generally appear to be functioning normally.
While some illiquidity can be attributed to the U.S. Treasury interdealer broker market during the time of the hack and the post-auction period, it is challenging to disentangle market moves from other factors such as comments from Federal Reserve Chair Jerome Powell and the fallout from the poorly received auction. ICBC has stated that it successfully cleared Treasury trades executed on Wednesday and repurchase agreements (repo) financing trades conducted on Thursday.
Lockbit, which was first discovered in 2020, has targeted approximately 1,700 U.S. organizations, according to the U.S. Cybersecurity and Infrastructure Security Agency. This latest attack on ICBC highlights the ongoing vulnerability of large organizations’ systems and the need for robust cybersecurity measures.
As a result of the attack, the yield on the 10-year U.S. Treasury note, which serves as a benchmark for borrowing costs globally, experienced a 3 basis point decrease, currently standing at around 4.59%. On Thursday, it rose by 11 basis points, with yields moving inversely to prices. In terms of ICBC’s performance, its Hong Kong-listed shares concluded Friday with a 0.8% decline, compared to a 1.13% drop in the Hong Kong main index.
The ransomware attack on ICBC serves as a reminder of the ongoing threats faced by global financial institutions and the potential consequences for financial markets. Regulators and market participants must remain vigilant and proactive in their efforts to prevent and mitigate such attacks, ensuring the stability and security of the global financial system.
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