Chinese bank run?

[Closet_Gamer]

So this is an interesting -- and disconcerting -- article.

Apparently a few Chinese banks have gotten themselves in a bad spot and are refusing to allow customers to withdraw money. Led to protests and an ugly clash with the police.

Small banks but still disconcerting. Particularly as two sizeable Chinese real estate firms have now defaulted on loans.

China has many tools to paper this over and won't have concerns about moral hazard, etc but bank runs can spread like a grass fire. If you're a citizen in Beijing and you start hearing that people can't get money out of the bank and the government just literally beat them into submission, may you starting quietly withdrawing some of the money from your bank...

A Chinese debt/bank crisis would have huge global ramifications.

https://us.cnn.com/2022/07/10/china/china-henan-bank-depositors-protest-mic-intl-hnk/index.html

 

[Gremlin]

Ugh, those poor people. One of the protestors lost his job due to the ongoing COVID lockdowns and now can’t access his savings.

“Being unemployed, all I can live on is my past savings. But I can't even do that now -- how am I supposed to (support my family)?" said Huang, whose son is in high school.

So this is an interesting -- and disconcerting -- article.

Apparently a few Chinese banks have gotten themselves in a bad spot and are refusing to allow customers to withdraw money. Led to protests and an ugly clash with the police.

Small banks but still disconcerting. Particularly as two sizeable Chinese real estate firms have now defaulted on loans.

China has many tools to paper this over and won't have concerns about moral hazard, etc but bank runs can spread like a grass fire. If you're a citizen in Beijing and you start hearing that people can't get money out of the bank and the government just literally beat them into submission, may you starting quietly withdrawing some of the money from your bank...

A Chinese debt/bank crisis would have huge global ramifications.

https://us.cnn.com/2022/07/10/china/china-henan-bank-depositors-protest-mic-intl-hnk/index.html

 

[Cobra9777]

 

[Cayman]

Reuters, other outlets reporting escalating protests, violence. Protests now taking place in the capital, Zengzhou at Peoples Bank of China (PBOC). Photos of bank customers trying to get their life savings out but dragged away and arrested by police. Their govt. may be able to squelch this... or not. Its a sorry situation. Thanks op for posting

 

[qwerty3656]

Another crazy side issue is that China has these ID cards that everyone uses for things traveling on trains etc. that monitor everyone's location. When protests were planned for this some government official turned everyone's "Health Code" to red so that people could not travel to protest.

https://www.reuters.com/world/china...-codes-turning-red-depositors-say-2022-06-14/

 

[Chuckanut]

There may be officials who are in Cahoots with the bankers. At least one banker has fled. And Covid tracking is possibly being used against demonstrators.

emphasis added...

What had been a local scandal became a national incident last month because of the misuse of the Covid-19 tracking app. Many who set out for Zhengzhou to demand action from regulators found that their health status on the app had turned red, preventing them from traveling. Some reported being questioned by police after checking into their hotel about why they had come to the city. Five Zhengzhou officials were later punished.

The banks froze millions of dollars worth of deposits in April, telling customers they were upgrading their internal systems. read more The banks have not issued any communication on the matter since, depositors said.

And here I thought waiting over three hours on the phone to get TD to unlock my account was a big problem. Foolish me.

 

[jebmke]

View attachment 42895

I was in BA when Argentina unpegged the peso from the dollar. The US news showed the usual "chaos" footage.

I was sitting in a cafe when my wife called to check in on me because of the "chaos in Buenos Aires."

"Well, I'm sitting in a café across the street from one of the banks. There is a long line of people waiting to get their money out. But a waiter with white gloves just delivered an espresso on a silver platter to someone in line so I think it will be OK."

 

[HillCountry]

This particular issue started about 3 month ago. It shows that the government are incompetent as well as they don't care about the people.

 

[NW-Bound]

So this is an interesting -- and disconcerting -- article.

Apparently a few Chinese banks have gotten themselves in a bad spot and are refusing to allow customers to withdraw money. Led to protests and an ugly clash with the police.

Small banks but still disconcerting. Particularly as two sizeable Chinese real estate firms have now defaulted on loans.

China has many tools to paper this over and won't have concerns about moral hazard, etc but bank runs can spread like a grass fire. If you're a citizen in Beijing and you start hearing that people can't get money out of the bank and the government just literally beat them into submission, may you starting quietly withdrawing some of the money from your bank...

A Chinese debt/bank crisis would have huge global ramifications.

https://us.cnn.com/2022/07/10/china/china-henan-bank-depositors-protest-mic-intl-hnk/index.html

From the above link:

The scene quickly descended into chaos, as security officers dragged protesters down the stairs and beat those who resisted, including women and the elderly, according to witnesses and social media videos.

One woman from eastern Shandong province told CNN she was pushed to the ground by two security guards, who twisted and injured her arm. A 27-year-old man from the southern city of Shenzhen, surnamed Sun, said he was kicked by seven or eight guards on the ground before being carried away. A 45-year-old man from the central city of Wuhan said his shirt was completely torn at the back during the scuffle.

Many said they were shocked by the sudden burst of violence by the security forces.

Even if the CCP (Chinese Communist Party) is not a perpetrator of the bank collapse, it would still not allow public protests and demonstrations to take place. The reason is that protests of this kind will just spur more protests of other grievances of political causes rather than financial ones.

In China, the only protests allowed and even organized by the CCP are rallies against Japan, the West, and generally foreigners.

It's the same in Russia, Cuba, Vietnam, and other authoritarian countries. In North Korea, people would not even dare. They would be machine-gunned.

 

[easysurfer]

This particular issue started about 3 month ago. It shows that the government are incompetent as well as they don't care about the people.

You mean people being welded into their homes during lock down wasn't the right approach after all?

 

[madatrub]

From what I've seen, they are dealing with a bubble of bad debt revolving around the real estate market.

 

[NW-Bound]

And here I thought waiting over three hours on the phone to get TD to unlock my account was a big problem. Foolish me.

Eh, in view of the account theft that we are talking about in concurrent threads, you should be happy that you still have an account there.

Imagine if TD or a broker told you "What account? The account number you gave me was liquidated and closed out last week".

 

[flyingaway]

These banks are in the rural areas and are probably under-regulated. They are not supported by the Chinese government, but they certainly have some strong connections. In China, you cannot get into the banking business without some strong government connections.
These things would not happen to the government-backed official banks, because they could just print more money.

 

[marko]

And then there's Sri Lanka situation. Seems like people worldwide are taking matters into their own hands.

 

[HillCountry]

You mean people being welded into their homes during lock down wasn't the right approach after all?

People don't have access to their own money for 3 months. Think that if you need the money for some urgent medical expense, should the government do something?



BTW, this affects 400,000 people.

 

[NW-Bound]

People don't have access to their own money for 3 months. Think that if you need the money for some urgent medical expense, should the government do something?

BTW, this affects 400,000 people.

It did!

It sent riot police with shields and batons to beat up and kick the people, then drag them to jail.

 

[ShokWaveRider]

People don't have access to their own money for 3 months. Think that if you need the money for some urgent medical expense, should the government do something?

Not if it is Authoritarian, thankfully we are not in that position ..... yet.

 

[aja8888]

People don't have access to their own money for 3 months. Think that if you need the money for some urgent medical expense, should the government do something?

BTW, this affects 400,000 people.

Don't you realize this is a Communist country? These people will be lucky to find something to eat every day.

 

[marko]

People don't have access to their own money for 3 months. Think that if you need the money for some urgent medical expense, should the government do something?
BTW, this affects 400,000 people.

It did!

It sent riot police with shields and batons to beat up and kick the people, then drag them to jail.

I lived in China for a while. Let's just say they do things differently from what we Westerners might expect.

 

[flyingaway]

These are likely scams, not systematic banking problems.

These rural banks, about five, (sponsored by one formal bank), used higher interest rates to attract online customers for CDs. It is likely that some people inside these banks used fake software to lure customers to "buy" CDs from these banks, but the money never went into the banks, but to somewhere else.

These customers never went to the banks, they just used third-party platforms and software. Because the CDs are not immediately accessible, they did not know the problem until the CDs are due in April. The banks could not pay because they do not have the money in the first place.

 

[aja8888]

These are likely scams, not systematic banking problems.

These rural banks, about five, (sponsored by one formal bank), used higher interest rates to attract online customers for CDs. It is likely that some people inside these banks used fake software to lure customers to "buy" CDs from these banks, but the money never went into the banks, but to somewhere else.

These customers never went to the banks, they just used third-party platforms and software. Because the CDs are not immediately accessible, they did not know the problem until the CDs are due in April. The banks could not pay because they do not have the money in the first place.

The age old question....Where did the money go?

Crypto is going thru this now.....stable coins not having any "funds" (Woops!)....where did the money go?

 

[NW-Bound]

It did!

It sent riot police with shields and batons to beat up and kick the people, then drag them to jail.

Ugh!

I just saw a video where they sent plain-clothes police in white shirts or black polos to beat up and arrest people.

 

[aja8888]

Ugh!

I just saw a video where they sent plain-clothes police in white shirts or black polos to beat up and arrest people.

This is not as bad as what's going on in Sri Lanka right now.

 

[Gremlin]

This is not as bad as what's going on in Sri Lanka right now.

I know it won’t come anywhere close to solving their country’s problems, but at least the people of Sri Lanka have a small sliver of satisfaction of running their leader out of his palace and swimming in his pool. Even if only for a moment! Hopefully they get access to fuel, food, and medicine soon.

 

[NW-Bound]

Hah, it's a long time before Chinese people get to invade Xi JinPing's palace, and tour his residential quarters.

Sri Lanka's armed forces are not as well armed as the Chinese People's Liberation Army, and most likely nowhere as brutal.

Heck, the Chinese gummint so far only had to send thugs in white shirts, and they could easily chase the protesters away, or captured some to lock up for an example.

Have people forgotten what happened at Tiananmen Square in 1989?