Spate of bank runs forces China regulators and police to act

[The_King]

SOCIAL media-fuelled rumours about banks collapsing are popping up at an unprecedented frequency in China, forcing regulators and even the police to step in to calm depositors.

Just since the past month, worried savers have descended on three banks to withdraw funds amid rumours of cash shortages that were later dismissed as false.

Over the weekend customers rushed to a bank in the northern Hebei province to take out money, prompting local regulators to publicly vouch for the soundness of its lenders as the police halted the run.

 

Confidence in the US$43 trillion banking system is eroding among the nation's more than one billion account holders, threatening a cornerstone of China's rise into an economic powerhouse. After several bailouts and the first bank seizure in more than two decades last year, the coronavirus outbreak and its economic fallout have exacerbated an already shaky situation in the world's largest banking system.

 

"The perception Chinese savers had of banks being risk-free is changing even though in nearly all recent cases their deposits have been protected," said Zhang Shuaishuai, a Shanghai-based analyst at China International Capital Corp. "Once a rumour like this spreads, it brings immediate liquidity risk to a bank."

For decades, deposit-taking has provided a stable and low-cost funding base for China's financial market, playing a key part in the rise of its economy to the second largest in the world.

Chinese households hold about 90 trillion yuan (S$17.8 trillion) of bank deposits, more than anywhere else in the world. Regulators are now not only seeking to soothe nerves publicly, but are also raising the protection to preserve this cushion for banks.

The run in Hebei came after authorities kicked off a pilot programme to limit large transactions in the province. The two-year programme, which is set to be expanded to Zhejiang and Shenzhen in October to encompass 70 million people, would require retail clients to pre-report any large withdrawals or deposits of 100,000 yuan to 300,000 yuan.

The China Banking and Insurance Regulatory Commission on Saturday again warned that lenders are facing a surge in bad debt as the economy sputters at its slowest pace in four decades.

While stopgap measures, which have included rolling over debt and delaying loan payments, have limited an immediate surge in bad debt, the regulator said that the fundamental issues of poorly managed banks and the deteriorating ability of companies and individuals to repay loans are still far from solved.

They are also asking banks to forgo 1.5 trillion yuan in profit this year by offering lower lending rates, cutting fees, deferring loan repayments, and granting more unsecured loans to small businesses to help the economy.

Authorities have more than 3,000 banks to oversee, most of which are small, rural entities without ready access to capital.

In another unprecedented move, China now plans to allow local governments to use about 200 billion yuan from bond sales to help smaller banks replenish their capital.

The industry overall may suffer an eight trillion yuan increase in bad debt this year, S&P Global has estimated. Small banks are facing a US$349 billion shortfall in capital, according to an analysis by UBS Group AG. Putting that figure at only US$50 billion, the regulator said that the shortfall could mean slower profit growth or even sliding profits at some institutions.

Corporate bonds are also suffering, adding further pressure on banks. About 80 billion yuan worth of Chinese bonds defaulted on and offshore so far this year, the most in at least three years, according to data compiled by Bloomberg. BLOOMBERG

 

[Standing Birdy]

Ironically the measures like limiting withdrawal amounts only lead to more doubt and fear, which lead to more people joining the bank run. 

The trick used by some US banks during great depression would probably work better.

1. Slow down the processing of customers to a crawl so they form a long line outside the bank. Make the line as long as possible

2. Have security trucks show up throughout the day and transport loads and loads of cash into the bank in public view. Make sure those in the line get a good look at the trucks coming and the cash (nowadays people will video and post on social media)

3. Repeat for a few days. Can reuse the same cash by reloading the trucks at night.

4. People have better things to do than stand in line for days to watch cash being unloaded. End of bank run.

[aaur4man]

6 minutes ago, Standing Birdy said:

Ironically the measures like limiting withdrawal amounts only lead to more doubt and fear, which lead to more people joining the bank run. 

The trick used by some US banks during great depression would probably work better.

1. Slow down the processing of customers to a crawl so they form a long line outside the bank. Make the line as long as possible

2. Have security trucks show up throughout the day and transport loads and loads of cash into the bank in public view. Make sure those in the line get a good look at the trucks coming and the cash (nowadays people will video and post on social media)

3. Repeat for a few days. Can reuse the same cash by reloading the trucks at night.

4. People have better things to do than stand in line for days to watch cash being unloaded. End of bank run.

 

But still great depression still depress.

 

Ironically I think China might be the better off country here 

[Standing Birdy]

11 minutes ago, aaur4man said:

 

But still great depression still depress.

 

Ironically I think China might be the better off country here 

And we are heading into the wuhan virus depression. In any crisis, some thrive, some survive, some die. If do nothing or do the wrong thing, probably die.

[The_King]

Gold is money.

Everything else is credit.

 

 

The King

[socrates469bc]

the quantitative easing of the past decade will come back to haunt the world this time with a vengeance, courtesy of wuhan virus.

 

we r now entering an economic cold winter despite some equity markets recouping to pre-mar level.

 

wahahahahhahah

[socrates469bc]

37 minutes ago, Standing Birdy said:

Ironically the measures like limiting withdrawal amounts only lead to more doubt and fear, which lead to more people joining the bank run. 

The trick used by some US banks during great depression would probably work better.

1. Slow down the processing of customers to a crawl so they form a long line outside the bank. Make the line as long as possible

2. Have security trucks show up throughout the day and transport loads and loads of cash into the bank in public view. Make sure those in the line get a good look at the trucks coming and the cash (nowadays people will video and post on social media)

3. Repeat for a few days. Can reuse the same cash by reloading the trucks at night.

4. People have better things to do than stand in line for days to watch cash being unloaded. End of bank run.

 

the fundamental issue is still not addressed.

 

the monetary transmission mechanism is broken becos of the relentless loose monetary policy of the past decade.

 

the credit created went into asset inflation, not physical production.

 

thats why despite the banks going into this winter well-cap, it may not be able to sustain the defaults which will arise over the next few mths.

[Standing Birdy]

1 minute ago, socrates469bc said:

 

the fundamental issue is still not addressed.

 

the monetary transmission mechanism is broken becos of the relentless loose monetary policy of the past decade.

 

the credit created went into asset inflation, not physical production.

 

thats why despite the banks going into this winter well-cap, it may not be able to sustain the defaults which will arise over the next few mths.

Yes the fundamental issue is huge. This depression might cause it to blow up or governments might be able to continue bailing out. Still too early to tell.

 

[socrates469bc]

34 minutes ago, aaur4man said:

 

But still great depression still depress.

 

Ironically I think China might be the better off country here 

 

china will not be in a better shape.

 

this is due to the mess in unregulated shadow banking, overproduction, overbuilding and banking frauds.

 

for the us, this will be due to the massive asset inflation over the past decade catching up and the re-emergence of shadow financing in mortgages.

 

 

[socrates469bc]

5 minutes ago, Standing Birdy said:

Yes the fundamental issue is huge. This depression might cause it to blow up or governments might be able to continue bailing out. Still too early to tell.

 

 

if the quantitative easing had been rein in 2013, the current situation would have been more manageable and monetary transmission mechanism would still be more than 1.

 

the only way out now is schumpeter creative destruction as the economic system is now having digestive problems with this excess liquidity.

[The_King]

24 minutes ago, socrates469bc said:

 

the fundamental issue is still not addressed.

 

the monetary transmission mechanism is broken becos of the relentless loose monetary policy of the past decade.

 

the credit created went into asset inflation, not physical production.

 

thats why despite the banks going into this winter well-cap, it may not be able to sustain the defaults which will arise over the next few mths.

World war 3 to reset everything

[The_King]

1 hour ago, Standing Birdy said:

Ironically the measures like limiting withdrawal amounts only lead to more doubt and fear, which lead to more people joining the bank run. 

The trick used by some US banks during great depression would probably work better.

1. Slow down the processing of customers to a crawl so they form a long line outside the bank. Make the line as long as possible

2. Have security trucks show up throughout the day and transport loads and loads of cash into the bank in public view. Make sure those in the line get a good look at the trucks coming and the cash (nowadays people will video and post on social media)

3. Repeat for a few days. Can reuse the same cash by reloading the trucks at night.

4. People have better things to do than stand in line for days to watch cash being unloaded. End of bank run.

As a public

 

 

1. Long line mean many many many ppl are withdrawing money. Mean I need to Q as something about to happen to bank

 

 

2. Must be cause by the long Q that many many money truck is needed as in so much money is withdrawn. Cause sooner or later the bank will run out of money and if money truck frequency is reduced and the long line still there mean it running out of cash

 

3. It happens for a few days already, seem like many many ppl are losing trust in bank. Better take out mine. Cause I wondering how much money the bank have left after so many many many many take out this few days

 

4. Q up is better things to do then to lose all my money. Q up for 1 days is worth it then to lose  my years or decades of savings

 

Bank crisis get worst with social media, bank collapse begin

Edited July 18, 2020 by The_King

[Standing Birdy]

3 minutes ago, The_King said:

As a public

 

 

1. Long line mean many many many ppl are withdrawing money. Mean I need to Q as something about to happen to bank

 

 

2. Must be cause by the long Q that many many money truck is needed as in so much money is withdrawn. Cause sooner or later the bank will run out of money and if money truck frequency is reduced and the long line still there mean it running out of cash

 

3. It happens for a few days already, seem like many many ppl are losing trust in bank. Better take out mine. Cause I wondering how much money the bank have left after so many many many many take out this few days

 

4. Q up is better things to do then to lose all my money. Q up for 1 days is worth it then to lose  my years or decades of savings

But what if you q whole day and don't get to withdraw? And next day you q still don't get to withdraw? The trick is to waste people's time while showing that the bank has lots of cash.

You and some people might q overnight but most people will probably decide they have better things to do once they see the cash trucks.

[The_King]

11 minutes ago, Standing Birdy said:

But what if you q whole day and don't get to withdraw? And next day you q still don't get to withdraw? The trick is to waste people's time while showing that the bank has lots of cash.

You and some people might q overnight but most people will probably decide they have better things to do once they see the cash trucks.

Mean I will get more and more worried and I am right that the bank have no money left and it about it collapse. That why keep delaying all the ppl

 

Cause that money truck, that money not for those in the Q cause we all are Q up and no one received the money for a few days already. Mostly likely that money from so many money truck is for big companies and they are doing the same thing like us and that truck trick failed

 

With social media postings video that many many many ppl unable to withdraw money and online banking say that say the same. It will get worst

 

 

It like I buy something online and paid already. the person say delivery in 2 days and the 2 days turn to week then to months and online meida, more and more ppl are saying they also order few months back and have not received it. Or unable to cancel order.

 

I don't think those ppl will say it ok. I will order for the person again. Maybe I order even more he will deliver

Edited July 18, 2020 by The_King

[The_King]

I just don't see it as in if ppl hear a bank problem, and start to Q up.

 

They will have such positive thinking. Wai so many money truck unloading money wait for us to collect.

 

Jin song. Now money wait for us to collect

 

I am not that positive

[Standing Birdy]

2 hours ago, The_King said:

I just don't see it as in if ppl hear a bank problem, and start to Q up.

 

They will have such positive thinking. Wai so many money truck unloading money wait for us to collect.

 

Jin song. Now money wait for us to collect

 

I am not that positive

Because you are not typical kgk

[The_King]

48 minutes ago, Standing Birdy said:

Because you are not typical kgk

Ya me is Dkgk 

 

Later harrisy bully me again