https://dinarrecaps.squarespace.com/our-blog/bank-runs-in-china-caused-by-a-sudden-surge-of-liquidity-concerns
Bank Runs in China caused by a Sudden Surge in Liquidity Concerns
The Survival Economist: 2-20-2022
"China’s banking sector has been dogged by a sudden surge in liquidity concerns". Where have we heard that before?
It's crazy to keep any significant amount of money in a bank. They pay virtually no interest anyway. First, it was Baoshang Bank , then it was Bank of Jinzhou, then, two months ago, China's Heng Feng Bank with 1.4 trillion yuan in assets, quietly failed and was just as quietly nationalized.
This Month, a fourth prominent Chinese bank was on the verge of collapse under the weight of its bad loans, only this time the failure was far less quiet, as depositors of the rural lender swarmed the bank's retail outlets, demanding their money in an angry demonstration of what Beijing is terrified of the most: a bank run!
The peasants are stupid, thinking their cash is in the bank.
Small Bank Collapse Triggers Credit Crunch in China. A growing number of analysts believe the next financial crisis is likely to start from China and its indebted banking system.
A recent incident substantiates these fears. Baoshang, a small lender based in the Inner Mongolia Autonomous Region, collapsed at the end of May, despite its numbers from a few weeks has given no indication that this was going to happen.
According to its most recent report filed with financial authorities, the bank registered a $600 million profit in 2017. It also had approximately $90 billion in assets, while its bad loans were under 2%. But then Baoshang suddenly failed, and Chinese regulators seized the bank – the first act of this kind in the People’s Republic this century – quickly blaming its owner of misappropriation of funds.
Observers note, however, that the significance of Baoshang’s collapse stems from the fact that it was caused by the country’s first default on interbank obligations. It has since become tough for smaller institutions to access the interbank lending market, on which they are heavily reliant.
And while the collapse of an Inner Mongolian bank may not sound like a Lehman-size event, in China, quantity has a quality all of its own. Numerous small and medium-sized Chinese banks combined are, in fact as large as the big players.
| 
Post time 21-2-2022 01:06 PM
Author
akar MSM".
