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Major Chinese bank shuts account of N. Korea's main forex bank

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(Globalpost/GlobalPost)

The state-run Bank of China has shut down the account of North Korea's main foreign exchange bank and halted transactions with it, news reports said Tuesday, in what may be a sanction by Beijing on Pyongyang for its recent long-range missile launch and third nuclear test.

China's largest foreign exchange bank gave no reason for the closure of the account of Foreign Trade Bank, which the United States has accused of helping finance North Korea's nuclear weapons and missile programs, the reports said, citing a brief statement issued by the Chinese lender.

The closure was the first publicly announced measure by a major Chinese bank to suspend its dealings with a North Korean bank in the wake of escalated tensions on the Korean Peninsula over Pyongyang's provocations and threats for nuclear war with South Korea and the United States.

"I think it is indeed a very noteworthy action," Zhang Liangui, a North Korea expert at the Central Party School, was quoted as saying by Reuters news agency. "In taking this action I think there are political considerations as well as considerations about its (Bank of China) own interests" of protecting its reputation.

But it is unknown how effective the cutoff will be in punishing North Korea because it is unclear how much of the $6 billion in China-North Korea trade goes through Foreign Trade Bank.

The bank's assets and investments are a state secret, but it caters to foreign embassies, nongovernmental organizations and U.N. agencies operating in Pyongyang, Reuters said.

When contacted by The Associated Press, a Bank of China spokeswoman did not identify the number of accounts closed or provide further details.

In March, the U.S. Treasury Department imposed sanctions on Foreign Trade Bank, effectively cutting it off from the U.S. financial system. Japan has followed suit.

China is North Korea's main economic and diplomatic benefactor, but the leadership in Beijing has expressed frustration with North Korea's leadership led by Kim Jong Un, who came to power after the death of his father and longtime ruler Kim Jong Il in December 2011.

==Kyodo

http://www.globalpost.com/dispatch/news/kyodo-news-international/130507/major-chinese-bank-shuts-account-n-koreas-main-forex-0