Chinese Bank Suffers 'Rare' Bank Run, Police Arrest "Rumor-Spreaders"

Tyler Durden's picture

Chinese police questioned 27 people, detained 12 and "severely" reprimanded 15, over the spreading of gossip about Linshang Bank - a lender with 61 billion yuan ($9.1 billion) in deposits - which caused a rare bank run in Eastern China.

The South China Morning Post reports that a few disgruntled employees at Shandong Sanwei Oil Group, an agricultural processing company, were unhappy after they were placed on leave when production lines were closed at the firm.

The employees spread a rumour that the firm was collapsing with billions of yuan in unpaid loans and that it might also bring down Linshang Bank, the report added.

 

The rumour spread quickly among residents, triggering a run on the local branch of the bank, according to the article. At one point more than 500 depositors gathered outside the branch demanding to withdraw their money.

The bank said in a brief statement on its website that the spate of withdrawals at one of its branches in Linyi in Shandong province on Monday was caused by “a few individuals spreading rumours” that the bank was in trouble.

The lender urged the public “not to believe in or spread rumours to jointly maintain good financial order”.

"In the face of rumors, we hope the public reacts rationally, does not believe in rumors, does not rumor-monger, to avoid harming their own interests."

 An official in the bank’s general affairs office told the South China Morning Post on Thursday the situation was now back to normal. A clerk at the bank’s Bancheng branch also said normal operations had resumed.

“Our branch managers have been explaining to our clients ... and most clients left the branch without withdrawing money after they knew it was just untrue gossip,” the clerk said.

As SCMP notes, regional banks in less developed areas are regarded as the weak links in China’s financial system as lenders often give large loans to local enterprises and may expose themselves to greater risks if local economic growth slows.

A rumour that a rural lender in Sheyang county in Jiangsu province had run out of money three years ago triggered a three-day run on the bank, which forced it to place stacks of cash behind teller windows to ease depositors’ panic.

While bank runs in China are unusual, the rapidity of this run (from gossip to deposit demands) makes us wonder just how fragile confidence must be among the average Jao. As a reminder, China’s central bank launched a deposit insurance system in May 2015, adopting Western-style protection for depositors. The maximum payout level is set at 500,000 yuan per depositor for each bank.

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So Close's picture

Drip, drip, drip....

remain calm's picture

"When it gets bad you have to lie" Junker

johngaltfla's picture

Time to send in Baghdad Ben Bernanke to calm the worried serfs. Sheesh, the ChiComs reallyi have to accelerate their cloning programs and get their own Bernank quickly before the real fun starts.

chiswickcat's picture

Just make it illegal to ask for your money.

Bernie Madolf's picture

Oh ye of little faith

A bank with liquidity sufficient to satisfy all deposit liabilities does not exist

Thus the desire to eliminate cash

The problem lies not with cash, but with the debt based fiat

Debt based fiat and large .gov requires exponential growth to maintain the ponzi

Kill the RC CB's. That is your only hope

GUS100CORRINA's picture

Chinese Bank Suffers 'Rare' Bank Run, Police Arrest "Rumor-Spreaders"

My response: ROFL!!! Bank run in China. Well, that is not allowed by the STATE!!! PRICELESS!!

Wait until TRUMP's trade war starts on Monday. Crazy times in which we live.

Antifaschistische's picture

"the firm was collapsing with billions of yuan in unpaid loans and that it might also bring down Linshang Bank"

 

...but I can guaran-damn-tee you that the families of all the corporate VIPs are still nestled away in the $5 million dollar homes in San Marino Ca...next door to the house they ALSO bought for cash...from the realtor...all of whom are Ling, Wong, Wang, Lin, etc...who will only sell to their 'brothers' from the homeland.

....sorry for you serfs in China...your money is gone.  Come to San Marino and see where it all went.

Mr... Robot's picture

He who panics first panics best.

TeddyBear's picture

Bitcoin is a Ponzi scheme. We now know the way it's going to go down. Zh will be arrested and will no longer be active on the web. They will be accused of causing a bank run. Sell everything. Sit on your hands. And hold on to Green pieces of paper.

TeddyBear's picture

And have your passport up-to-date.

Golden Showers's picture

Hey, Duck!

Yes, Boss?

Wanna see some dumbasses run to an ATM?

Sure, Boss!

"boop, boop boop, boop, pppppkkkPRCbeep,kkkchrrr"

HA HA HA HA HA!

Now get back to work, Duck!

Yes, Boss!

clade7's picture

Chinese bankrun?  akin to "Its a Wondelfur Rife" except in flipflops I imagine....

 

Jing Bao-Lee:  "Doncha see?  Your moneys not here, its in Woo's house, and Chins house, Old Man Wang is not selling, He's buying!"

TheMagician's picture

CIA Asian branch trying its usual tricks. This is just an opening poke. More will come. Activated sleeper China PLA agents in NYC, LA and SF will, of course, try their own tricks per their Beijing directives.

Our dear retarded drama queen in the WH thinks this Game of Thrones is fun. Well, lets see how fun it is when it gets out of hand...

Ban KKiller's picture

Inside job....someone could not keep quite so they told uncle Roo...

Ethereal's picture

The collapse of the Chinese Yuan caused by the massive printing of money to support "infrastructure" projects and fuel the insanity of the chinese real estate boom, is going to be the flashpoint of the next global financial crisis.  Deutsche Bank has the highest exposure of any western bank to these markets....  Bitcoin is about to take over the world!

https://blog.gridplus.io/blockchains-aol-moment-9ad91385b5b7

U4 eee aaa's picture

I guess the government doesn't sense the irony. If it only takes a few rumors to create a crisis at your bank then it really isn't sound in the first place

Seasmoke's picture

It amazes me, the illusion of banks doesn't cause BANK SPRINTS daily.

VWAndy's picture

As if you could keep up with a rumor about money In China. You tell family first thing.

corporatewhore's picture

Creditanstaldt by any other name soon playing at a bank near you.

BritBob's picture

Chinese rumor spreader - China – Argentina – the Falklands

In tune with Macri's words, Xi Jinping thanked Argentina "the support they have given us for our claim of a single China as we support theirs for the Falkland Islands."  (Telam 17 May 2017)

How can Argentina claim the Falklands when she has never legally owned them?

Falklands- Never Belonged to Argentina:

https://www.academia.edu/31111843/Falklands_Never_Belonged_to_Argentina

 

Chuck DeBongo's picture

As a fellow Brit, I agree with you. The Falkland Islands belong to the UK. No-one else!

my new username's picture

we hope the public reacts rationally, does not believe in rumors, 

->Fixed

we hope the public reacts irrationally, does not believe in rumors, 

my new username's picture

Reading and commenting on this website can be quite challenging, with all the ads popping up, moving, shifting and sliding around. 

oncemore's picture

brave browser, chromium with adb plus, firefox with adb plus

even Chrome with adb plus

use duckduckgo to search, why do you shriek? do something....

or you install a pc as an entry point to your home network and use ip-tables to handle it.

why do you talk about it?

you have a million tools to get rid of adds.

roddy6667's picture

I've never seen any of them. Why do you do this to yourself? I use the Firefox browser with Adblock Ultimate.

oncemore's picture

China should do the same in US and spread panics thru fake news over fake book.

Five Star's picture

Chinese corporations have negative cumulative cash flow going all the way back to 2001

http://thesoundingline.com/chart-day-chinese-corporate-debt-bubble/

gregga777's picture

Once deposited at the bank it's NOT your money any longer, it's the bank's money and you're just an unsecured JUNIOR creditor.

dietrolldietroll's picture

zh is such doom porn

Herdee's picture

Who's turn to devalue and print next? Musical chairs indicate the Americans are on deck, this fall season.

Stormtrooper's picture

Right, the Chinese already did their share at 35 Trillion.  And their citizens accepted it for their labor and assets as if it were real money.  Same as in the US.  Same as in Europe.  Same as everywhere.  Gonna be a long, painful journey back to reality.  Another Dark Ages?

SybilDefense's picture

Since this site used to be about financial info, I will ask a question: if the US imposes sanctions on China to neutralize the steel and alum industry trade mismatch (as Trump stated) or in effort to impact Chinas decision to not assist in the NoKo conflict, what happens to Chinese internet stocks like Mono, Bidu, Sins, CWeb, KWeb, YY etc.  They got slammed last week on rumors of trade wars (to start Monday), but one would think these industries are not directly affected by such a decision, and internet access should jump during heightened political tensions as more users flock to the net for info?  These are NYSE tickers, so when the market goes down these stocks react accordingly, but perhaps contrary to reasoning.  Thinking this might be a buy the dip moment on stocks with %50 + gains over recent months as their earnings should not be too affected by the types of sanctions the WH is after.  Of course anything I do will be opposite of what I expect. 

I now return you to your regularly scheduled doom porn channel

83_vf_1100_c's picture

All is back to normal. Amazing what police arresting a few people at the head of the line does to assuage the public's fears.

Drop-Hammer's picture

Yeah, chink dog-eaters.  The "model minority".

DaBears's picture

So instead of getting their Mao-noploy money from the bank, police took them in instead? So the "rumors" that this chinese bank didn't have enough money was a fact.

3's picture

If a bank can't settle a tally with client's colateral, then it is in trouble! ...regardless of what that colateral is.