American International Group

'Back to normal' BEA shrugs off HK$2b run

PUBLISHED : Saturday, 27 September, 2008, 12:00am
UPDATED : Saturday, 27 September, 2008, 12:00am

The bank run that emptied about HK$2 billion from the Bank of East Asia's vaults on Wednesday largely dissipated yesterday as it reported that only a few branches experienced longer lines of customers than normal, a bank spokesman said.

Bank chairman David Li Kwok-po said branch operations were quickly returning to normal after 'a brief period of unusual activity resulting from rumours regarding the stability of our bank'.

He said the Monetary Authority had rejected the rumours which started the run as false and reaffirmed the bank's financial health.

'We sincerely regret any inconvenience that recent events may have caused to you, our customers,' Mr Li said in a newspaper announcement.

'We ... thank you all for your loyal support and continued confidence in our bank, and we remain dedicated to delivering services and products of the highest quality and value for you all.'

The rumours sent anxious depositors scurrying to the bank's branches to withdraw savings.

In a research note, DBS said the bank's management revealed that about HK$2 billion in deposits were withdrawn on Wednesday as a result of the rumours. This amount represented only 0.67 per cent of the lender's total deposit base.

The bank had total cash on hand of between HK$2 billion and HK$3 billion. A police investigation into the case was continuing, the bank spokesman said.

The rumours, spread by phone text messages, claimed that the bank was experiencing financial difficulties because of its exposure to bankrupt investment bank Lehman Brothers and troubled insurance giant AIG.

The bank has outstanding exposures of HK$422.8 million to Lehman Brothers and HK$49.9 million to AIG, mainly through collateralised debt obligations.