October 31, 2019 / 9:49 AM / 13 days ago

Rural Chinese lender cautiously re-opens for business after averted bank run

YICHUAN, China/BEIJING (Reuters) - For three days, a 67-year-old resident of Baiyuan village in central China waited outside her local bank branch in a bid to withdraw her savings following rumors of trouble at the rural lender.

A woman walks past a branch of Yichuan Rural Commercial Bank in Yichuan county, Henan province, China October 30, 2019. REUTERS/Huizhong Wu

When guards outside the Yichuan Rural Commercial Bank branch finally let her in on Thursday, staff advised her not withdraw her two-year time deposit.

“I’ve been coming since Monday, as I was afraid there would be no money, and I wouldn’t be able to withdraw it,” said the resident, who gave her last name as Liu. “I was waiting in line the whole time, since 6 a.m. in the morning.”

“The workers at the bank said even if you took it home, you would still be worried, leaving such a wad of cash at home,” Liu said.

She was one of hundreds of depositors who converged on Yichuan’s various branches this week in central Henan province, following talk that the lender’s boss had been detained by authorities.

On Wednesday, China’s anti-corruption watchdog confirmed it was investigating Kang Fengli, the former chairman of the Yichuan bank and its biggest stakeholder, for suspected corruption, while the central bank promised to take “forceful” measures to preserve financial order.

Depositor anxiety has been exacerbated by China’s slowing economy and worries about how that would affect the health of thousands of small lenders.

Yichuan, which has 33 branches alone in the county it’s named after, had earlier this week put up a notice assuring depositors of its financial health and urged people to ignore rumors and not to take out deposits blindly. A local woman was arrested for spreading “false information” about the bank’s financial health.

Heightened security and assurances from authorities had calmed the situation by Thursday.

At branches in two villages and the county seat visited by Reuters, security guards outnumbered customers. At one branch, staff had stacked wads of pink 100 yuan bills behind glass at a counter to calm clients.

In Baiyuan, guards dressed in the ubiquitous black uniforms of private security stopped people without accounts at a branch from entering the bank.

In Yaodi village, also in Yichuan county, the local branch was patrolled by young men wearing red vests with the word “volunteer” on the back.

“Yesterday and the day before, there were so many people that cars couldn’t get past on the road,” said local resident Su Maxi.

He did not withdraw his funds after learning of the bank’s notice.

The Yichuan county government didn’t immediately reply to a Reuters request for comment on Thursday. Repeated calls to the Yichuan bank and its branches went unanswered.

The bank has received 30 billion yuan ($4.26 billion) in urgent funding support from Henan Province Rural Credit Cooperatives Union, 5 billion yuan from the local branch of the People’s Bank of China, and 1.5 billion yuan from the Henan Rural Commercial Bank, according to an online report in the county’s Communist Party newspaper on Wednesday.

Chinese characters reading, "seriously disrupting the financial order, jeopardizing economic, financial security and even social stability" are seen on a scrolling display at a branch of Yichuan Rural Commercial Bank in Yichuan county, Henan province, China October 30, 2019. REUTERS/Huizhong Wu

The Yichuan News report was titled “Meeting held by the Party committee of Yichuan county to resolve the problem of depositors rushing to withdraw savings”.

It was no longer accessible online as of Thursday.

An official from the Henan branch of China’s banking and insurance regulator declined to comment on the online report, when asked by Reuters on the sidelines of a government press conference in Beijing.

Reporting by Huizhong Wu in Yichuan and Cheng Leng in Beijing; Editing by Ryan Woo, Sam Holmes & Simon Cameron-Moore

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