Evergrande Bankruptcy Fears Spark A Bank Run In China
Date
10/14/2023 12:05:38 AM
(MENAFN- Asia Times) One of heavily indebted Chinese property developer Evergrande's local lenders displayed this week a“cash wall” of renminbi notes at its office after depositors queued up to withdraw their deposits in what could be the front edge of a bank run crisis in China.
Hundreds of people have queued up at the Bank of Cangzhou's head office in Hebei province to get their deposits out of the bank since October 7, according to photos and videos circulated on social media.
The mini-run came after netizens circulated a post that claimed dozens of Chinese banks would need to write off their loans if Evergrande went bankrupt. According to the social media post, Evergrande owes Cangzhou Bank about 3.4 billion yuan (US$466 million). Asia Times could not independently confirm the figure in time for publication.
The Bank of Cangzhou said its outstanding loans to Evergrande and its affiliates amounted to only 340 million yuan as of October 6, or one-tenth of the amount claimed in the widely circulated social media post. It said it had sufficient lands and properties as collateral to cover any Evergrande-related losses.
“The overall risk is controllable and will not have a significant impact on the bank's operations, management and asset quality,” it said.
However, Chinese media reports said the bank's statement and“cash wall” have so far failed to assuage its depositors. In China,“cash walls” are commonly seen at corporate events such as the delivery of annual bonuses.
A cash wall built with piles of renminbi notes Photo: Weibo
Meanwhile, transparency concerns are rising. Police in Cangzhou said they arrested several people for allegedly spreading rumors that the Bank of Cangzhou will soon go bankrupt.
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