The move comes as the banks are still bearing the brunt of billions of dollar losses over the ongoing Russia-Ukraine conflict.
Global banks such as Societe Generale, JPMorgan Chase and UBS Group have already urged their employees to evaluate contingency plans to deal with any untoward situation, added the news agency citing people privy to the development.
In addition, insurance firms are backtracking on forming new policies for companies that make investments in China and Taiwan.
According to the report, costs for political risk coverage have increased over 60% after Russia invaded Ukraine.
Boston University professor Mark Williams was quoted by Bloomberg as saying: “Political risk around potential US sanctions and the likelihood that China would respond by restricting capital flow has kept risk managers busy.
“A sanctions war would significantly increase the cost of doing business and push US banks to rethink their China strategy.”
The growing tensions between the US and China have worried the lending giants, who had to suddenly shutdown their operations in Russia a few months back.
Last week, American lawmakers beefed up pressure on banks to clarify their stand on possible exit from their Chinese business in the event of an invasion of Taiwan by the US.
Unnamed financial services executives have told the publication that they believe that the risk of armed conflict in North Asia is not high.
However, sanctions and reverse-sanctions between the US and China could badly impact the trade and finance.
Any departure from their Chinese operations may lead to a turnaround for US companies, which have invested billions into the country after it loosened its grip in the country’s finance sector.