Rural banks in China’s eastern city of Yancheng yesterday stacked piles of cash in plain view behind teller windows to calm depositors lining up at bank branches for a third straight day following rumors that they had run out of cash.
According to residents of Sheyang County, which includes Yancheng, the panic began on Monday with a rumor that a branch of one local bank turned down a customer’s request for a 200,000 yuan (US$32,200) withdrawal. Banks declined to comment and reporters were unable to verify the rumor.
The affected institutions are tiny compared with the scale of China’s financial sector, and the rush for cash appears to be an isolated incident so far. Rumors also found especially fertile ground there after a failure of three less-regulated credit cooperatives in January.
Yet the news caught nationwide attention, reflecting growing public anxiety as regulators signal greater tolerance for credit defaults.
Miao Dongmei, who runs a baby supply store opposite the branch of the Jiangsu Sheyang Rural Commercial Bank first targeted by depositors, said she kept money at the bank, but did not join the stampede.
However, she said she had seen other customers carrying baskets full of cash out of the bank branch, while armored cars kept pulling up to deliver fresh loads of currency.
Sheyang bank employees said that some branches had been open 24 hours over the past two days.
A visit to one branch showed tellers had stacked bricks of yuan notes immediately behind the glass, piled above head level, and assembled cash piles the size and height of a double bed in the back to show there was enough to go around.
Despite repeated appeals from local officials for calm, by Tuesday the run had extended to another local bank — the Rural Commercial Bank of Huanghai, residents said.
Earlier yesterday, police and security guards stood by as dozens formed a long line outside while an electronic billboard urged depositors not to be worried by rumors.
Sheyang County Governor Tian Weiyou (田為友) yesterday posted a video on the county government’s Web site, urging depositors not to panic.
“Please be assured that the People’s Bank of China and the rural commercial bank system will ensure the interests of all depositors will be protected,” Tian said in the two-minute video statement.
“The county’s rural commercial banks will ensure that there will be enough funds for depositors to withdraw at any given time,” he said.
Staff at the Sheyang bank were also handing out copies of a statement dated on Monday, endorsed by the local branches of the central bank and the China Banking Regulatory Commission, as well as the Zhejiang Sheyang Rural Commercial Bank.
“The Sheyang bank has total deposits of 12 billion yuan, the most in Sheyang County; its capital position is very strong,” the statement said.
Huanghai and Jiangsu Sheyang banks declined to comment.