- The banking industry takes cyber incidents seriously and has invested billions in cybersecurity.
- The industry is closely watching how ICBC handles the incident and its potential impact on markets.
- The decision-making regarding the incident will be done in China, specifically in Beijing, Shanghai, and Hong Kong.
- ICBC has stated that the incident only affects its US unit and they are working to contain it.
- Counterparties have closed off connections with ICBC's US unit to avoid infection, raising questions about how transactions will be delivered and closed.
- The incident may have affected the Treasury auction, but it is unclear if it has prevented Chinese buyers from transacting in US Treasuries.
- The market is still gathering information on how the incident will ultimately affect future trades.

Industrial & Commercial Bank of China Ltd.’s US unit was hit by a cyberattack Thursday, rendering it unable to clear swathes of US Treasury trades and forcing the world’s largest bank to trade via USB sticks. Jennifer Surane examines the impact on the global financial system on Bloomberg Television.
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What is the response of London banks to this, Jennifer?

What is the response of New York banks and indeed other state-owned enterprises in China?

Yeah, I mean, I think the entire industry really takes not just this incident, but every cyber incident pretty seriously.

They've been investing billions in this space and I think every bank CEO if you get them you know off to the side at a conference and ask them what keeps you up at night almost every single 1 of them will say cyber because it's it's something that they can spend billions on and still you know fall susceptible to So I think the entire industry is obviously watching very carefully how ICBC handles this, how it could impact markets.

But really, the lesson here is this is a persistent and really scary risk for these banks.

Can I assume that the decision making on this for this beleaguered large bank will be done in China?

That all movements will be back to Beijing, Shanghai and Hong Kong?

So they've made clear in statements that they've put out that this is only affecting this 1 U.S.

Unit and that it hasn't yet affected other divisions, but they are apparently reaching out back to their home office to make sure that this doesn't spread from here and really trying to make sure that the effects are limited and contained to where it's already hit.

Do we understand the mechanics of what actually gets getting interrupted here.

That basically my understanding is counter parties closed off their connections with the US unit of ICBC in order not to get infected with the virus which raises this question of how I see B.C.

Delivers and closes some of the transactions that it's gotten orders on.

And I think you know it's interesting because that is generally the response we see from banks is as soon as they've identified a risk in the system they try to close themselves off from that.

And so that was why you saw a lot of folks yesterday during the Treasury auction kind of citing this incident as why it might have been so sloppy as you guys said earlier.

Although it wouldn't affect the number of people, particularly those from China, that would be coming in to look to buy those treasuries, right?

Ostensibly, those transactions would still, at some point, come to the fore, even if it's on a USB stick, going to another bank.

Do we have a sense of whether this actually has prevented Chinese buyers from coming in and transacting in U.S.

Yeah I think there were a lot of market participants that pretty quickly hit back on the idea that this was the sole reason behind yesterday's auction activity.

And so I think we're still trying to get a sense of just, you know, how exactly those trades will ultimately be handled.

Does this actually end up, you know, really fundamentally changing the way those trades are handled going forward?

So I think we're still kind of in the information gathering stage on.


Speaker 0: What is the response of London banks to this, Jennifer? What is the response of New York banks and indeed other state-owned enterprises in China?

Speaker 1: Yeah, I mean, I think the entire industry really takes not just this incident, but every cyber incident pretty seriously. They've been investing billions in this space and I think every bank CEO if you get them you know off to the side at a conference and ask them what keeps you up at night almost every single 1 of them will say cyber because it's it's something that they can spend billions on and still you know fall susceptible to So I think the entire industry is obviously watching very carefully how ICBC handles this, how it could impact markets. But really, the lesson here is this is a persistent and really scary risk for these banks.

Speaker 0: Can I assume that the decision making on this for this beleaguered large bank will be done in China? That all movements will be back to Beijing, Shanghai and Hong Kong?

Speaker 1: So they've made clear in statements that they've put out that this is only affecting this 1 U.S. Unit and that it hasn't yet affected other divisions, but they are apparently reaching out back to their home office to make sure that this doesn't spread from here and really trying to make sure that the effects are limited and contained to where it's already hit.

Speaker 2: Do we understand the mechanics of what actually gets getting interrupted here. That basically my understanding is counter parties closed off their connections with the US unit of ICBC in order not to get infected with the virus which raises this question of how I see B.C. Delivers and closes some of the transactions that it's gotten orders on. Is that kind of what is going on here.

Speaker 1: Yeah. No I think that's exactly right. And I think you know it's interesting because that is generally the response we see from banks is as soon as they've identified a risk in the system they try to close themselves off from that. And so that was why you saw a lot of folks yesterday during the Treasury auction kind of citing this incident as why it might have been so sloppy as you guys said earlier.

Speaker 2: Although it wouldn't affect the number of people, particularly those from China, that would be coming in to look to buy those treasuries, right? Ostensibly, those transactions would still, at some point, come to the fore, even if it's on a USB stick, going to another bank. Do we have a sense of whether this actually has prevented Chinese buyers from coming in and transacting in U.S. Treasuries.

Speaker 1: Yeah I think there were a lot of market participants that pretty quickly hit back on the idea that this was the sole reason behind yesterday's auction activity. And so I think we're still trying to get a sense of just, you know, how exactly those trades will ultimately be handled. Does this actually end up, you know, really fundamentally changing the way those trades are handled going forward? So I think we're still kind of in the information gathering stage on.

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What’s the Fallout From the ICBC Cyber Attack?