Worried depositors descend on Jiangsu bank amid insolvency rumours
Jiangsu Sheyang Rural Commercial Bank, based in the city of Yancheng, is desperately trying to allay depositors' concerns after they rushed to withdraw money at one of its branches following rumours that it was insolvent.
In the latest sign of cracks appearing in the mainland's financial system, a rural commercial lender in Jiangsu province is grappling with a run on a branch by worried depositors.
"Rumours about our solvency triggered the chaos," an official with the lender, who declined to be identified, told the South China Morning Post by phone yesterday. "The situation was serious and we will probably ask the police to find out the origin of the rumours."
About 1,000 nervous depositors have gathered at the Qingfeng branch since Monday, prompting the bank's chairman to visit the branch to ease their concerns. However, unease among depositors was continuing, the official admitted. He said the bank was trying its utmost to stop the situation from developing into chaos.
"We are a legal bank licensed by the China Banking Regulatory Commission [CBRC]," he said. "We have sufficient capital to pay back the depositors." The CBRC and its branch in Yancheng could not be reached for comment.
Concerns about the asset quality of mainland banks have been mounting following reckless loan approvals since 2008, when the government embarked on a massive stimulus programme. A collapse of the mainland's illegal underground banking system is believed to have exacerbated the bad-loan problem.
More loan guarantors have either gone bust or seen their bosses flee recently, according to the China News Service.