To offset US sanctions risk, banks bake in China loan clauses

Global lenders seek to hedge against the threat of US sanctions on China – which seems unlikely to ease under Biden

US-China trade war

As diplomatic tensions spike between the US and China, global banks in Hong Kong are introducing loan contract clauses to mitigate the risk of sanctions. The language allows a lender to terminate its contract early if a counterparty falls subject to sanctions during the deal’s lifetime.

This same rationale is prompting lenders to re-examine their onboarding processes – to make sure they are appropriately modelling potential linkages between firms.

US sanctions risk in China has been steadily

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