A” cash wall” of renminbi information was displayed this week at the department of one of the heavily indebted Chinese real estate developer Evergrande’s local creditors as depositors flocked to withdraw their funds in what may be the early stages of an ongoing bank run problems in China.
Since October 7, hundreds of people have gathered at the Bank of Cangzhou’s headquarters in Hebei province to withdraw their payments, according to images and videos posted on social media. & nbsp,
The mini-run occurred after online users circulated a message claiming that if Evergrande went bankrupt, lots of Chinese banks would have to write off their debts. Evergrande owes Cangzhou Bank about 3.4 billion renminbi( US$ 466 million ), according to the social media post. Asia Times was unable to independently verify the number in time for publication.
As of October 6, the Bank of Cangzhou reported that its excellent funding to Evergrande and its members amounted to just 340 million renminbi, or one-tenth of the amount claimed in the broadly shared social media post. It claimed that it had enough land and properties as collateral to pay off any costs related to Evergrande.
According to the statement,” the overall risk is manageable and won’t significantly affect the company’s operations, supervision, or asset quality.”
However, according to Chinese media reports, the company’s statement and” money wall” have so far been ineffective in calming down lenders. In China,” money rooms” are frequently observed at corporate events like the distribution of yearly bonuses.
However, concerns about accountability are growing. Authorities in Cangzhou claimed to have detained a number of individuals for allegedly disseminating speculations about the impending bankruptcies of the Bank.
As the Hong Kong High Court will hear a bankruptcy case brought by Evergrande’s offshore creditors on October 30th, earlier hopes that the company you avoid debt are waning. & nbsp,
The State Council stated in a recommendation on October 11 that it will assist industrial commercial banks and remote financial institutions in getting rid of bad assets and loans while also replenishing their money through various channels in order to allay concerns that the continuous home problems may endanger China’s financial stability.
According to a joint statement from the People’s Bank of China( PBoC ), the former China Banking and Insurance Regulatory Commission, and the financial management office of the local government in Suning, Cangzhou, consumers should make informed decisions and avoid being influenced by rumors and losing their interest income. & nbsp,
According to the statement, the Bank of Cangzhou had 245.6 billion yuan in total assets as of the end of September, a gross income of 1.21 billion, and the most recent tax payment of 600 million Yuans. It stated that the bank has a stable and healthy financial position. In addition, & nbsp,
According to the speech, China’s payment insurance scheme, which ensures that a depositor may be compensated up to 500, 000 yuan in the event that their bank files for bankruptcy, also provides good protection for the bank.
A Hunan-based author claims in an article that while all banks in China contribute to loan insurance, the country safeguards the security of people’s deposits through legislation. The nation’s record, which is the highest amount of funds at this time, is used to guarantee deposit insurance.
He advises people to deposit their money in state-owned businesses rather than exclusive banks if they still lack confidence in them. & nbsp,
The Bank of Cangzhou may fail due to stories more than Evergrande’s unpaid bills, which a Henan-based blogger who writes under the Ku Ge pen name contends is an unimportant matter. He points out that if all of the lenders abruptly withdrew their funds, perhaps a large institution like the Industrial and Commercial Bank of China do fail.
The decline of any Chinese estate developer may earn as bad resources in institutions, according to Chinese observer Shi Shan in a YouTube video that was posted on October 13. He asserted that while big banks currently have enough cash on hand, smaller ones might need to ask lenders to wait for payments. & nbsp,
” Technical” divorce
Hui Ka-yuan, the president of Evergrande, was reportedly” subject to necessary procedures in accordance with the law due to suspicion of unlawful crimes” as of September 28 according to a registration to the Hong Kong stock exchange.
Hui was reportedly being watched by officers earlier, according to Bloomberg. Foreign commentators claimed that if Hui is punished, it will likely be because Evergrande’s wealth control system is unable to pay back its investors. & nbsp,
However, the situation appears to be much more complex. & nbsp,
Financial regulators were worried about Hui’s” professional” marriage from his family Ding Yumei, according to a report by The 21st Century Business Herald on September 28.
According to the review, Evergrande had paid its shareholders dividends totaling about 90 billion yuan over the previous several years, with the couple receiving the majority of it through their offshore companies with British Virgin Islands and Cayman Islands registrations. It stated that following the child’s divorce, Ding then has control over this money.
A corporate leadership expert was cited in the statement as saying,” Hui had said in a high-profile speech in 2021 that he could gain everything but would not permit his employees to” lie toned”( in the delivery of properties to owners ). However, he was really saying and doing different things.
According to reports, the pair got divorced next year. Ding had left Hong Kong in late July and was no longer listed as Hui’s family in Evergrande ‘ issuing from August of this year. She is in possession of a French card.
Beijing ordered Evergrande to create property delivery its major commercial priority when its debt crisis became visible in 2021. In order to pay back Evergrande’s debts, Hui was also compelled to sell his opulent sailboat, mansion, and aircraft. & nbsp,
However, the company also had net current responsibilities of 687.7 billion yuan at the end of next year, along with a total debt of 2.44 trillion. Falling house prices this year have more hurt it. & nbsp,
According to Chinese media reports, Evergrande also has 1.62 million empty rooms, which have an impact on more than 5 million individuals. & nbsp,
Study: As chairperson probed, Evergrande was seen as more likely to fail.
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