WeChat Rumor Sparks Panic at Bank, Cash Runs!

Source: South China Morning Post

Police in China arrested a woman after she spread a rumour via WeChat that the local rural commercial bank is going bust, leading to hundreds of customers rushing to withdraw cash from the lender in Henan province in the latest case to hit small regional banks during the economic slowdown.


The 29-year-old female, surnamed Wang, was detained by police in Yichuan county after concentrated cash withdrawals from Yichuan Rural Commercial Bank. She is expected to be punished with five days in a detention centre for fabricating facts and disrupting social order.

The bank did not specify the reason for the sudden demand for cash withdrawals, but confirmed on Wednesday that services and operation are running normally.


The local authority said in a statement on Wednesday that the banks chairman, Kang Fengli, 54, had been placed under investigation for possible serious violations of discipline and law.


Regulators said the bank was in normal operation with sufficient capital, while the notice jointly issued by local branch of the Peoples Bank of China and the China Banking Regulatory Commission also issued on Wednesday confirmed that all deposits at the bank are covered by insurance.

Local authorities warned that spreading rumours about the financial system is a behaviour distorting financial order, endangering economic and financial security and even threatening social stability.



Yichuan Rural Commercial Bank, which has 33 branches in the county, was incorporated 10 years ago as a consolidation of several rural credit co-operatives. According to its 2018 annual report, the bank had 53 billion yuan (US$7.5 billion) in total assets at the end of 2018 with a non-performing loans ratio of 2.95 per cent.

China Chengxin Credit Rating Group, the countrys largest ratings agency, downgraded the banks rating at the end of July, citing increasing bad debts.

Linshang Bank, a local bank in the city of Linyi in Shandong province, suffered a similar run in August 2017, with the local police eventually detaining 11 people for causing the panic.

Chinas central bank launched a nationwide deposit insurance system in 2015 that covers individual deposit accounts up to 500,000 yuan (US$70,000).



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