A part of the Industrial and Commercial Bank of China (ICBC) in the United States had some computer problems this week. It seems like harmful software attacked their systems, and this might have caused some issues with US Treasuries (a type of investment). This trouble possibly led to a quick market downturn on Thursday.
ICBC Financial Services, located in New York, talked about the issue in a statement. They explained that the attack happened on Wednesday and that they had informed the police. Right now, they are looking into what happened and trying to fix their computer systems.
The statement also mentioned that they managed to deal with trades involving US Treasuries from Wednesday and financial transactions from Thursday, despite the cyberattack.
Cyber Attacks and How ICBC Reacted
Ransomware attacks involve a kind of online extortion where the attacker locks up the victim’s data or computer systems and demands payment to unlock them.
The computer issues at ICBC’s main office in Beijing and other branches in China and abroad didn’t happen, including at the ICBC New York Branch, according to the unit.
ICBC, a government-owned bank, is the largest among China’s “Big Four” banks and the world’s biggest lender by assets, as per S&P Global. China’s Foreign Ministry mentioned on Friday that they are closely watching the situation. A spokesperson from the ministry, Wang Wenbin, said they’ve taken quick actions to handle the problem and minimize risks and losses.
Regulators worldwide are looking into the consequences of this situation in the global financial system.
“We know about the cybersecurity problem and stay in touch with important players in the financial sector, along with federal regulators. We are keeping a close eye on the situation,” stated a representative from the Treasury.
How Cybersecurity Worries Are Affecting the Markets
The US Securities and Exchange Commission is also aware of what happened, and a spokesperson for the agency mentioned that they are keeping an eye on it, particularly with the goal of ensuring fair and orderly markets.
A representative from the UK Financial Conduct Authority mentioned that they are in contact with the relevant authorities and businesses in the US and UK to figure out if there are any impacts on UK financial services.
According to reports from the Financial Times and Reuters, some people involved in the market mentioned that transactions through ICBC were disturbed, affecting how much money was available in the market. It’s not clear if this situation had anything to do with the not-so-strong 30-year bond auction by the US Treasury on Thursday.
After the auction, there was a significant drop in the value of Treasuries, as noted by Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, in a note to investors on Friday. She mentioned that the returns on various types of bonds went up.
Market Fluctuations and Global Impact on Thursday
On Thursday, the S&P 500, the Dow, and the Nasdaq all ended the day with lower values.
“The quick rise in US yields definitely had a negative impact on US stocks yesterday,” she explained. “The US bond auction created a lot of unpredictability, raised questions, and caused uncertainty.”
Peter Cardillo, who is the chief market economist at Spartan Capital Securities, suggests that the ransomware attack might have played a part in the 30-year auction not performing well. The attack could have affected the bank’s ability to complete transactions or caused detours, thereby influencing the availability of funds in the Treasury market or the ability to swiftly trade an asset.
China is a significant participant in the Treasuries market. As of August, the latest data from the US Treasury Department shows that China possessed Treasury securities valued at $805.4 billion. It stands as the second-largest foreign holder of US Treasury bills, following Japan.
Worldwide, ransomware attacks have caused disruptions in the functioning of businesses and crucial public services. This problem has evolved into a matter of national and economic security for President Joe Biden’s administration.
A cyber attack affected a part of ICBC in the US, causing problems in financial markets. ICBC is looking into it, and global authorities are responding to potential consequences. This incident shows how cybersecurity can impact markets and is drawing regulatory attention. China’s role in the Treasuries market makes it more complex, highlighting broader implications for national and economic security.