Mr X is the chief financial controller of a Hong Kong blue chip company. On Wednesday he advised his brother-in-law to pull his savings out of the Bank of East Asia.
Unlike most of us, Mr X knows about capital adequacy ratios and liquidity ratios. He also knows BEA's reported ratios are way above average. 'What I don't know is whether the bank's management knows what is really on its books,' he told me.
Mr X may be cynical, but he is not being unreasonable.
A few days before the bank run, BEA, which has repeatedly assured the public of its limited exposure to the troubled credit-related products, revealed that a rogue trader had cheated on some equity derivative deals that wiped HK$131 million, or 12 per cent, off the bank's original 2008 interim profit.
Not only did the internal control system fail to catch him, but also the internal audit and review by the external auditor.
A week has gone by since the manipulation of records by the rogue trader was exposed, but the public remains in the dark about how it happened and what remedial actions have been taken.