China’s Biggest Bank Hit by Ransomware Attack
Wall Street is in a frenzy after a ransomware attack on China’s largest bank, which disrupted trading in the $25 trillion market for US Treasuries. The attack on a New York unit of the Industrial and Commercial Bank of China was first brought to light by the Financial Times, exposing vulnerabilities in the world’s largest and most liquid Treasury market.
With the bank’s systems compromised, ICBC Financial Services had to resort to sending a USB stick with trading data to BNY Mellon to help settle trades, according to sources familiar with the situation. The attack not only disrupted the settlement of Treasury trades but also had a noticeable effect on market liquidity, prompting hedge funds and asset managers to reroute trades.
The impact of the hack at ICBC may have contributed to a sharp sell-off in long-dated Treasuries following a $24 billion auction of 30-year bonds. BNY requested multiple extensions of the operating hours of Fedwire, a real-time payments platform operated by the US Federal Reserve, to buy more time to settle Treasury trades due to the attack.
The world’s largest custodian bank, BNY, has since disconnected ICBC from its platform and does not plan to reconnect until a third party confirms it is safe to do so. The Securities and Exchange Commission has stated that it continues to monitor the situation with a focus on maintaining fair and orderly markets.
Ransomware attacks have become increasingly prevalent since the coronavirus pandemic, with businesses more vulnerable due to remote working and cyber criminal groups becoming more organized. Cyber security experts are urging companies to rethink their approach to ransomware defense.
As reported by Joshua Franklin and Kate Duguid in New York, Costas Mourselas and George Steer in London, Colby Smith in Washington, and Cheng Leng in Hong Kong, this ransomware attack on ICBC has sent shockwaves through the global financial system, prompting urgent meetings at the bank’s headquarters in Beijing and leaving Wall Street traders and brokers scrambling to minimize the fallout.