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Ben Kwok

Withdrawal rush leads to day of long lunch at BEA
September 24 may just  go down in  Bank of East Asia's corporate history as the day with the longest and busiest lunchtime.
A Lai See contact went to the bank's Central headquarters just before  12.30pm  and managed to take out his money in 10 minutes before heading off to eat. Another contact chose to have a quick bite  before lining up for a  money transfer and it was 5pm by the time he left.
The bank's internal system was said to be down for hours. Sources said some of the bank's ATMs ran out of money and other users of its online banking platform were stuck.
Of course, any bank would have difficulty processing hundreds of customers queuing up outside its branches and requesting their money back.
BEA's extension of its opening hours and the statements of support from the government appeared to help little  in dispersing the crowds.
Perhaps we can put yesterday's mini-run on BEA down to a streak of bad luck, after last week's disclosure that it had US$54 million in exposure to failed Wall Street titan Lehman Brothers. Also last week, BEA disclosed an additional HK$93 million in first-half losses due to a rogue equity-derivatives trader who has since been reported to police.
BEA chairman David Li Kwok-po (above) returned  to Hong Kong last night from a business trip in the US. Meanwhile, his son Adrian Li Man-kiu, the bank's general manager, was seen walking the main hall of headquarters with a red face during the long lunch.  BEA executive director Joseph Pang Yuk-wing seemed to lose  his temper at one point after reporters asked why his bank would allow fixed-deposit holders to withdraw their money. 'Have you ever worked in the bank?' he shouted back - twice.
What  caused the run is still a mystery. Some suggested the rumours of problems at BEA were spread in an internet discussion forum.
Many others said it started with a mysterious SMS circulated among  mobile-telephone users (a message we tried but failed to track down)  that was rumoured to have been circulated by overseas hedge funds attempting to short sell BEA's stock. The Hong Kong Economic Times reported the so-called SMS curse yesterday.
One thing that is certain is that Lai See and many of his readers received a number of telephone calls about BEA right after lunch - all asking the same question - and many people appear to have voted with their feet.
At the heart of a bank run is fear - a fast spreading and usually irrational fear. But in these uncertain times, many appear to believe that it pays to err on the side of caution. (Erring on the side of risk has definitely proven expensive.)
We hope you have a less hectic lunch today.
Keep taking the pills
'How to cope with depression' might sound like the opening lines of a pamphlet you would expect to find in your  psychologist's office. So Lai See  was a bit taken aback to find the phrase as the title of a recent HSBC research report on the state of the global economy.
'Banking collapses carry echoes of the 1930s ... while Depression will be avoided ... it's a matter of surviving rather than thriving,' economist Stephen King writes.  Needless to say this is not cheery reading.
But Mr King is not alone in drawing parallels between the  Depression of the 1930s and today's financial crisis. Consider this academic analysis:
'Those who doubt that there is much connection between the economy of the 1930s and the supercharged, information-age economy of the 21st  century are invited to look at the current economic headlines - about high unemployment, failing banks, volatile financial markets, currency crises and even deflation. The issues raised by the Depression, and its lessons, are still relevant today.'
The author of those words, published in the preface to a collection of papers in 2000, is one of academia's foremost experts on the  Depression: Ben Bernanke. Better known for his current role as the chairman of the US Federal Reserve, Mr Bernanke's studies should serve him well as he attempts to help push through a US$700 billion bailout package for the financial industry.
As HSBC notes: 'Time for a dose of economic Prozac'.



Lai See