Chinese police make arrests in Henan banking scandal that has put spotlight on financial risks
- Police have arrested the ‘first batch’ of suspects and frozen assets related to a cash crisis at rural banks in Henan and Anhui
- The case has highlighted the vulnerability of lenders in China’s less-developed regions as the risk of recession grows
Police in central China’s Henan province have arrested a number of suspects allegedly involved in a “complicated” cash crisis involving rural banks, while investigators continue to search for the whereabouts of customers’ missing deposits.
The arrests come after months of protests from anguished savers, who have been unable to withdraw cash from their accounts at small rural banks in Henan and Anhui provinces.
The case has highlighted the vulnerability of lenders in China’s less-developed regions as the risk of recession grows in the world’s second largest economy.
The case involves long lasting crimes, numerous suspects and complicated plots
The rural banking crisis allegedly revolves around a private investment firm called Henan Xincaifu Group Investment Holding – which was controlled by a man surnamed Lu – which police began investigating in April.
Public records show the company, which had stakes in numerous rural banks and shadow companies, closed in February.
Police have accused Lu of illegally manipulating and taking advantage of online transactions at these rural banks.
“The case involves long lasting crimes, numerous suspects and complicated plots,” the police announcement said.