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

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.


Bernie Madolf Sat, 08/12/2017 - 13:51 Permalink

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

Antifaschistische Bernie Madolf Sat, 08/12/2017 - 15:05 Permalink

"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 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.

In reply to by Bernie Madolf

Golden Showers Sat, 08/12/2017 - 13:55 Permalink

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!

TheMagician Sat, 08/12/2017 - 13:56 Permalink

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...

U4 eee aaa Sat, 08/12/2017 - 14:08 Permalink

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

BritBob Sat, 08/12/2017 - 14:26 Permalink

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:  

SybilDefense Sat, 08/12/2017 - 18:59 Permalink

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

DaBears Sat, 08/12/2017 - 22:20 Permalink

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 Sun, 08/13/2017 - 03:27 Permalink

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