Bank of China closes N Korea's main forex bank account
08 May 2013
Bank of China Ltd has closed the account of North Korea's main foreign exchange bank, which was hit with US sanctions in March following Washington's accusation of it having helped finance Pyongyang's nuclear weapons programme.
The state-run Foreign Trade Bank was told its transactions had been halted and its account closed, Bank of China, the country's biggest foreign exchange bank, said in a brief statement on Tuesday. It gave no reason for the closure and the bank declined to comment further.
According to analysts, the closure comes as the first significant step by a Chinese entity in curbing dealings with North Korea in the wake of international pressure to punish Pyongyang over its banned nuclear and ballistic missile programmes.
According to Zhang Liangui, a North Korea expert at China's Central Party School, he thought it was indeed a very noteworthy action. He added that Bank of China was probably concerned about its reputation and had therefore closed the account.
He added, in taking the action he thought there were political considerations as also considerations about its own interests.
Transactions between US entities or individuals and the Foreign Trade Bank are prohibited under US sanctions.
While Japan has followed suit, Australia would be expected to do the same soon. Washington had also urged the EU to impose sanctions on the Foreign Trade Bank and had raised the issue with China, although Beijing had not commented on the bank.
The move comes after the new Chinese showed signs of increasing frustration with North Korea's young leader, Kim Jong Un, as also the nuclear and missile tests his government had conducted, which led to worsening regional tensions.
Analysts say in recent months Beijing has been more willing to work with Washington on a range of measures including signing UN sanctions to issuing a statement with US secretary of state John Kerry last month calling on North Korea to abandon its nuclear programmes.
China which is North Korea's economic lifeline, provides nearly all of its fuel and most of its trade. North Korea has been economically dependent on China, moreso after a standoff with South Korea that effectively closed down an industrial park, an important source of hard currency.
The Bank of China's suspension of business with the Foreign Trade Bank would further complicate the ability of North Korea's main foreign exchange bank, to access a key financial market.
Earlier, in March, the US treasury department, after imposing sanctions against the Foreign Trade Bank, effectively cut it off from the US financial system and urged Beijing to do the same.