It is an all-too-familiar tale. Depositors trust a bank with their cash in the hope their wealth will be managed well, only to find that the money has evaporated at the end of the agreed term. In the latest scandal to rock China's banking industry, dozens of depositors lost their multimillion-yuan investments in a "wealth management product" (WMP) sold at a Shanghai branch of Huaxia Bank. The sorry saga was a rude reminder that Ponzi schemes thrive on the mainland, where millions of residents still believe that banks are the safest havens for their lifelong savings. On Tuesday evening, more than 40 depositors protested against alleged malfeasance by Huaxia Bank at an outlet in Jiading district in Shanghai. They vented their anger at the bank after being informed that Zhongding Wealth Investment Centre, which issued a WMP to them last year, would be defaulting on its repayment to them. "Huaxia is a state-owned bank, and to some extent, it is doing business under the government's directions," an investor surnamed Gong said. "How can we trust the government and the Communist Party … now that a state-owned bank refuses to pay our money back?" Fitch Ratings says mainland commercial banks have sold an aggregate 12 trillion yuan (HK$14.9 trillion) in WMPs, most of which offer a higher yield than banks' deposit rates and so are attracting an increasing number of customers. Gong, a retired worker, said she was convinced by Pu Tingting, a customer manager at the Jiading outlet, that the Zhongding product was worth buying. "She told me the branch's chief had also bought the product," Gong said. "I trusted the bank and its staff, so I decided to buy, too." The WMP offered an annualised interest rate of 11 per cent, more than triple the benchmark deposit rate set by the central bank. Huaxia Bank said in a statement that Pu was a rogue employee and the product was sold without the bank's authorisation. An official at the Jiading outlet, who was from the bank's Beijing headquarters and declined to be identified, told the South China Morning Post that Pu had been taken by Shanghai police, who are carrying out a criminal investigation. The victims said their total investment in the Zhongding product could amount to more than 500 million yuan. Xiao Gang, chairman of Bank of China, warned the number of defaults in similar schemes could soar in the future and eventually trigger a liquidity crisis in the banking system. Mainland banks worked closely with trust companies or other entities that package trust loans into WMPs, with the lenders acting as middlemen to sell the products, Xiao wrote in a commentary published in the China Daily in October. The Zhongding WMP provides a vivid snapshot of the practices the institutions engage in. Zhongding raised the money through Huaxia Bank to fund the construction of car dealerships in Henan province. The victims said Huaxia Bank informed them the borrower was found to have committed crimes. "Shouldn't Huaxia take responsibility?" said Zhou Guowu, an investor who spent 500,000 yuan on the Zhongding product. A report on internet portal NetEase reported that Pu's husband said she had been made a scapegoat by the bank. At least five investors claimed they knew Pu well and said the bank encouraged her to promote the sale of the Zhongding WMP. "Our money was deposited into Huaxia's accounts via the branch's counters," said one investor. "For ignorant investors like us, we were buying Huaxia Bank's product and we want our money back from Huaxia." An official with Industrial and Commercial Bank of China, who asked not to be named, said the WMP sector had recently been spinning out of control in a fundraising spree. "Lacking efficient regulations, more scandals are set to surface as banks blindly and aggressively issue WMPs," he said. "What's worse, to our knowledge, some customer managers are helping cash-hungry businesses raise funds through the WMPs without official approval from the banks." About 55 per cent of outstanding WMPs were scheduled to mature this quarter, and a further 19 per cent would expire in the next quarter, Fitch said. It said WMPs at mainland banks grew 3.5 trillion yuan in the first nine months of this year, of which 85 per cent were sold by mid-size joint-stock or city and rural commercial banks. "Proceeds raised from the products containing credit can be used to repay, roll over or purchase borrowers' existing loans," Charlene Chu, Fitch's head of Chinese bank ratings, said in a report. "This can give the appearance of high repayment rates of corporate loans - and by extension, strong banking-sector asset quality and corporate-sector health - when, in fact, the loans are not being repaid by borrowers themselves but rather by investors." Xiao, who is tipped to replace Zhou Xiaochuan in March as the central bank's governor, has compared the proliferation of WMPs on the mainland to shadow banking. "Regular banking and shadow banking are not isolated from each other," he wrote in the commentary. "Many activities in the two systems feed into each other and could influence each other if things start to deteriorate."