The Government moved quickly to support Hong Kong's smaller banks yesterday with the financial secretary, the monetary authority and the SAR's three most powerful banks issuing statements to limit the damage of the run on International Bank of Asia (IBA). Fears the run might spread to other banks this morning galvanised the Government into action as it hastily compiled a statement designed to prevent nervous account holders from withdrawing their savings. Despite the reassuring messages, some financial analysts said account holders may seek to withdraw their savings today but agreed the run would be short lived. IBA vice-chairman and chief executive Mike Murad played down the run, saying the $600 million to $700 million withdrawn yesterday was insignificant, adding the bank's shareholders - the Arab Banking Corp (ABC) and China Everbright - would back the bank to the hilt. 'As far as we are concerned the run is over,' he said, blaming unnamed brokers for starting rumours about IBA as well as other banks in Hong Kong. He said ABC had already transferred 'billions of dollars' to IBA, and China Everbright had pledged aid if required. Mr Murad said all 28 of the bank's branches would be open today and vowed to meet customers' needs in full. Financial Secretary Sir Donald Tsang Yam-kuen issued a specially prepared statement saying the SAR's banking system was sound and pledged Government support for IBA if required. 'It is a shame that IBA has been affected by rumours that have no foundation,' Sir Donald said. He said the strength of most banks' performance during the first nine months of the year would provide a 'cushion' against present difficulties. The Hong Kong Monetary Authority yesterday said it was aware of rumours 'certain banks were experiencing financial difficulties' had been intensifying and conducted an investigation which concluded that the 'rumours are without foundation'. The authority also pledged financial aid - at normal commercial rates - for IBA and any other bank that experiences difficulties should the need arise. In a rare move, the SAR's three note-issuing banks - Hongkong Bank, Bank of China and Standard Chartered - expressed their full confidence in the SAR's banking system and said banks were well positioned to withstand periods of volatility. 'Due to both capable management and the high standards of prudential supervision exercised by the Hong Kong Monetary Authority, Hong Kong's banks are well capitalised and maintain high levels of liquidity,' the note issuers said. Analysts were divided over whether the attempts to buoy confidence in the banking sector would work, pointing out that Hong Kong residents were particularly susceptible to rumours. 'Most banks here are in pretty good shape. The recent events have hurt them a bit but they are well capitalised and well supervised,' one banking analyst said. 'If the Arab Banking Corp has transferred the cash, confidence will be restored fairly quickly. 'It [the run] only reflects the nervousness in Hong Kong.' But another analyst said: 'The next question is who's next? You will have people taking their money out of the smaller banks and putting it into the likes of Hang Seng Bank.' ING Baring Securities (Hong Kong) analyst Peter Redhead said: 'There is usually a flight to quality in these situations which will benefit Hang Seng Bank and Hongkong Bank. 'There's going to be a lot of damage-limitation from the big boys. It's pretty negative and will not be perceived well in the market or the community.' Shares in IBA dropped 12 per cent yesterday as a result of the rumoured run, with shares in First Pacific Bank, Bank of East Asia, Dao Heng Bank and Kwong On Bank also suffering declines as rumours the run would spread increased. Representatives from each bank said withdrawals were running at normal levels yesterday and added they were not expecting any unusual activity today. Deo Heng Bank spokesman Helen Kwan Chuen-yi said the bank was financially secure and rumours of a run were unfounded, a sentiment mirrored by representatives from Kwong On Bank and Bank of East Asia. IBA in 1991 was the subject of another run, which it quelled within 24 hours.