BEIJING, Oct 29 (Reuters) - A rural lender based in China’s central Henan province sought to assure depositors of its financial health after a high volume of over-the-counter requests at some of its branches on Tuesday, amid concerns of liquidity issues at smaller Chinese lenders.
As a result, operation at those branches was slower than usual, Yichuan Rural Commercial Bank, which has 33 branches operating only in Henan’s Yichuan county, said in a notice posted on its official WeChat account.
The bank did not specify the nature of the counter requests, but warned that “making up and spreading rumours about the financial system will severely disrupt the order of financial market and the security of country’s economy”.
The bank urged people not to “believe in rumours and take out deposits blindly”.
Earlier this year, a rare government seizure of then little-known Baoshang Bank and the following state-rescue of Jinzhou Bank and Hengfeng Bank revived concerns about the true health of hundreds of small lenders in the country as China’s economic growth slowed to nearly a 30-year low.
The Yichuan bank said it had sufficient assets, good business operation and management, and that the interest of all depositors is protected by law.
China has also tightened its scrutiny over the shareholder structure of small banks amid fears that loans from the lenders to their big shareholders could prove a weak point in the country’s financial system.
By end-2018, the total assets of Yichuan stood at 53.3 billion yuan, and its bad loan ratio was at 2.95%, higher than the industry average of around 2%, according to a credit report of China Chengxin International Credit Rating Co (CCXI).
CCXI on July 31 downgraded the credit rating of Yichuan Rural Commercial Bank to A+ from AA-, citing a concentration of loans to a single industry, surging bad debts, and sliding corporate savings. (Reporting by Cheng Leng and Ryan Woo in Beijing; Editing by Ed Osmond)