Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Chinese depositors left in dark as three local banks freeze deposits

Economy May 18, 2022 04:50AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration

By Engen Tham

SHANGHAI (Reuters) - Three banks in China's central Henan province have frozen at least $178 million of deposits, offering scant information on why or for how long, leaving firms unable to pay workers and individuals locked out of savings, depositors told Reuters.

Yu Zhou Xin Min Sheng Village Bank, Shangcai Huimin Country Bank and Zhecheng Huanghuai Community Bank froze all deposits on April 18, with all three telling customers they were upgrading internal systems. The banks have not issued any communication on the matter since, depositors said.

None of the three banks responded to Reuters' emails or phone calls seeking comment.

While nominally small, China's numerous local banks have outsized significance because they lend to small and mid-sized firms so their activity can be an indicator of the health of the economy, the world's second-biggest after the United States.

Bank earnings and asset quality are widely expected to deteriorate due to reduced business activity brought about by strict COVID-19 containment measures, raising the prospect of economic contraction in the second quarter of the year.

Depositors of the three banks told Reuters they had been communicating with each other via messaging app WeChat about how to retrieve funds. Some posted screenshots of frozen accounts and shared conversations with bank staff.

Some posted videos of protests outside bank branches, while others said they had travelled to the banks' headquarters in search of an explanation only to be turned away by police.

The China Banking and Insurance Regulatory Commision, which was cited in media reports on May 1 as saying it was looking into the matter, and the People's Bank of China, the central bank, did not respond to faxed requests for comment.

ANGER

Depositors from the southern Zhejiang province communicating over WeChat compiled a spreadsheet seen by Reuters in which they self-reported 1.2 billion yuan ($177.55 million) in frozen funds across the three banks.

As the banks have customers across China, magazine Caixin on April 30 reported the frozen amount could total $1.5 billion.

Jerry Chang, owner of a factory in Hubei province, cannot access his over 6 million yuan deposited at Yu Zhou Xin Min Sheng Village Bank.

"Not being able to withdraw money has a huge impact on the operation of our factory, including procurement and workers' wages," said Chang, who used the bank because of its marginally higher interest rate of 1.85%.

Tony Qian, an investment consultant from Zhejiang province, cannot access the 20 million yuan he put in Yu Zhou Xin Min Sheng Village Bank that he had been saving to buy property.

"The thing I'm most angry about is ... no one has explained anything to us," said Qian.

Chinese depositors left in dark as three local banks freeze deposits
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email