China asks banks to pause new loans to US-sanctioned refiners, Bloomberg News reports

May 6 (Reuters) – China’s financial regulator has advised the country’s largest lenders to temporarily suspend new loans to five refineries recently sanctioned by the United States for their ties to Iranian oil, Bloomberg News reported on Wednesday, citing people familiar with the matter.

Reuters could not immediately confirm the report.

The report stated that the National Financial Regulatory Administration (NFRA) in a verbal instruction asked banks to refrain from issuing new loans in yuan but not to call existing loans.

Banks have been told to review business deals with companies, including China’s largest private refinery, the Hengli Petrochemical (Dalian) Refinery, according to sources cited in the report.

NFRA and Hengli did not immediately respond to Reuters’ request for comment.

The official directive, issued before May 1, contradicts a statement issued by China’s Ministry of Commerce on May 2, in which the government asked firms to ignore US sanctions.

The call to reject the sanctions marks the first time China has resorted to blocking measures introduced in 2021 – designed to protect Chinese firms from foreign interference deemed unwarranted.

In April, the U.S. Treasury imposed sanctions on Hengli Petrochemicals, accusing it of buying billions of dollars in Iranian oil, exacerbating Washington’s long-standing efforts to cut Tehran’s oil revenue.

The United States has warned two Chinese lenders that they would be subject to secondary sanctions if they were found to have transacted with Iran, without the banks being identified, U.S. Treasury Secretary Scott Bessent said last month.

Sanctions have created some obstacles for refineries, such as difficulties in purchasing crude oil and having to sell refined products under different names.

(Reporting by Fabiola Arámburo in Mexico City, Selena Li in Hong Kong, Liu Siyi in Singapore, Li Qiaoyi in Beijing; Editing by Jacqueline Wong and Kim Coghill)