Today, a fourth prominent Chinese bank was on the verge of collapse under the weight of its bad loans, only this time the failure was far less quiet, as depositors of the rural lender swarmed the bank's retail outlets, demanding their money in an angry demonstration of what Beijing is terrified of the most: a bank run.
Local business leaders, political cadres and banking executives rallied Thursday at the main branch of Henan Yichuan Rural Commercial Bank, just outside the central Chinese city of Luoyang, where they stood one by one before a microphone to pledge their backing for the bank, as smiling employees brandished wads of cash before television cameras to demonstrate just how much cash, literally, the bank had. It was China's latest, and most desperate attempt yet to project stability and reassure the public that all is well after rumors spread that the bank's chairman was in trouble and the bank was on the brink of insolvency.
The bank run at Yichuan Bank, located in China's landlocked province of Henan, makes it at least the fourth bank that authorities have rushed to rescue this year.
Try as Beijing might the bailouts have not gone unnoticed, and culminated in what today has been a three-day bank run at Yichuan Bank.
While Yichuan Bank has plenty of competition, including large state-owned banks in nearby Luoyang, an ancient capital of China known, Yichuan Bank accounted for 71% of deposits and 82% of loans in its county as of September 2018, according to China Chengxin International Rating Agency.
The true number is far, far higher, but Beijing guards it with its life, as the alternative is a bank run on the world's largest bank system, which with $40 trillion in assets, is roughly double that of the US. So far Beijing has been lucky, in that people tend to be notoriously bad with numbers.
Immediately thereafter, depositors started demanding their money back earlier this month; as speculation circulated on social media that the bank was on the verge of insolvency, the crowds at bank branches grew thicker, and so the bank run began.
https://www.zerohedge.com/markets/chinese-bank-verge-collapse-after-sudden-bank-run
Local business leaders, political cadres and banking executives rallied Thursday at the main branch of Henan Yichuan Rural Commercial Bank, just outside the central Chinese city of Luoyang, where they stood one by one before a microphone to pledge their backing for the bank, as smiling employees brandished wads of cash before television cameras to demonstrate just how much cash, literally, the bank had. It was China's latest, and most desperate attempt yet to project stability and reassure the public that all is well after rumors spread that the bank's chairman was in trouble and the bank was on the brink of insolvency.
The bank run at Yichuan Bank, located in China's landlocked province of Henan, makes it at least the fourth bank that authorities have rushed to rescue this year.
Try as Beijing might the bailouts have not gone unnoticed, and culminated in what today has been a three-day bank run at Yichuan Bank.
While Yichuan Bank has plenty of competition, including large state-owned banks in nearby Luoyang, an ancient capital of China known, Yichuan Bank accounted for 71% of deposits and 82% of loans in its county as of September 2018, according to China Chengxin International Rating Agency.
The true number is far, far higher, but Beijing guards it with its life, as the alternative is a bank run on the world's largest bank system, which with $40 trillion in assets, is roughly double that of the US. So far Beijing has been lucky, in that people tend to be notoriously bad with numbers.
Immediately thereafter, depositors started demanding their money back earlier this month; as speculation circulated on social media that the bank was on the verge of insolvency, the crowds at bank branches grew thicker, and so the bank run began.
https://www.zerohedge.com/markets/chinese-bank-verge-collapse-after-sudden-bank-run
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