Fourth Chinese Bank on Brink After Rumor Spurs Depositor Exodus

ZH: Chinese Bank On Verge Of Collapse After Sudden Bank Run

"Our bank is state-backed, and your money is insured by deposit insurance," one female manager told her, but Ms. Li refused, her confidence in the state's lies crushed.

“We really can’t afford to lose the money,” she said.

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. It won't be the last.

Sina: 河南一银行储户集中提款 央行分支机构紧急澄

In county-level cities, rural commercial banks (formerly rural credit cooperatives) are the most widely distributed financial institutions, which are crucial to the production and life of local people.

　　On October 29th, the Yichuan Rural Commercial Bank in Luoyang, Henan Province, experienced incidents in which depositors concentrated their business. According to the Beijing News, a queue of tickets for personal business on the Internet shows that a man took a photo with a single number. The platoon number is displayed, its number is 1490, and there are 419 people queued in front. There are many people waiting in line at the bank.

The Chinese article says a woman started a rumor that the bank would go bust:

On the 30th, Yichuan Rural Commercial Bank announced that it was originally a woman who wanted to go bankrupt. Soon after, the police informed that the rumored woman was detained for five days in accordance with the law.

At the same time, the official also announced that the former party secretary and chairman of Yichuan Rural Commercial Bank Kang Fengli (Li) was investigated.

Because of a rumor, savers concentrate on business

However, even after coming in with cash and putting out the message about rumors, depositors were still taking their cash home:

Surprisingly, it did not work in China, as people continued to show up, adamant about withdrawing their funds; the bank run was accelerating, and nothing officials did could halt, or reverse it.

Zhang Yanting, a 51-year-old farmer, decided after several days of trying to pull his money out of the bank that he would keep his account open to collect the few dollars in grain subsidies he receives each year from the government. But Zhang still wanted most of his 13,000 yuan in deposits back.

After hours in line Thursday, the bank cashier handed him a wad of cash, which he happily stuffed into his bag. Zhang was unmoved by the promise of gifts, save for a bottle of water that he sipped from while waiting.

“I’ve been with the bank for 10 years and have never seen service this good,” he said.