China’s bank runs highlight abuse among small-bank shareholders, despite crackdown
- ‘The whip didn’t really hit the right places’, state media says
- At the heart of the issue is the opacity of small banks’ shareholding structure, which has allowed shareholders to amass stakes in the banks without regulatory approval, while also using the lenders to secure loans
An ongoing cash crisis in China’s central Henan province highlights the difficulties facing the nation’s regulators in their effort to clean up the country’s weak small rural lenders amid growing economic pressure and a poor outlook for the small-bank sector.
Since mid-April, thousands of depositors have been left in the dark as to the whereabouts of their savings at four rural banks in Henan.
Local media cited the China Banking and Insurance Regulatory Commission (CBIRC) last month as saying a probe had found that Henan Xincaifu Group Investment Holding, a private investment firm with stakes in all four lenders, colluded with bank employees to illicitly attract public funds via online platforms, resulting in the deposits being frozen.
A series of protests have since broken out Henan’s capital, Zhengzhou, with savers demanding back their money – estimated to be billions of yuan, according to depositors.
