Shanghai – Three banks in China’s central Henan province have frozen at least $178 million in deposits without saying why or for how long. As reported by Reuters, this means that businesses can’t pay their employees and people can’t access their savings.
On April 18, all deposits were frozen at Yu Zhou Xin Min Sheng Village Bank, Shanghai Huimin Country Bank, and Zhecheng Huanghuai Community Bank. Customers were told by all three banks that they were upgrading their systems. Since then, depositors say, the banks haven’t said anything about it.
Reuters sent emails and phone calls to all three banks, but none of them answered.
Even though they are small in size, China’s many local banks are very important because they lend to small and medium-sized businesses. This means that their activity can be a sign of the health of the world’s second-largest economy, which is China.
Most people think that strict COVID-19 containment measures will lead to less business activity, which will hurt banks’ earnings and the quality of their assets. This could cause the economy to shrink in the second quarter of the year.
The people who had money in the three banks told Reuters that they had been talking about how to get their money back through the messaging app WeChat. Some people shared screenshots of their frozen bank accounts and conversations they had with bank employees.
Some people posted videos of protests outside bank branches, and others said they went to the banks’ headquarters to find out what was going on but were turned away by police.
The China Banking and Insurance Regulatory Commission and the People’s Bank of China, the country’s central bank, did not respond to faxed requests for comment. On May 1, news reports said that the commission was looking into the situation.
ANGER
People from the southern Zhejiang province who talked to each other on the messaging app WeChat made a spreadsheet in which they self-reported 1.2 billion yuan ($177.55 million) in frozen funds in three banks. Reuters saw this spreadsheet.
Since the banks serve people all over China, the magazine Caixin said on April 30 that the amount that has been frozen could add up to $1.5 billion.
Jerry Chang, who owns a factory in the province of Hubei, can’t get his more than 6 million yuan out of the Yu Zhou Xin Min Sheng Village Bank.
Chang, who used the bank because it had a slightly higher interest rate of 1.85%, said, “Not being able to withdraw money has a huge effect on how our factory runs, including buying supplies and paying workers.”
Tony Qian, an investment consultant from Zhejiang province, can’t get the 20 million yuan he saved to buy property and put in Yu Zhou Xin Min Sheng Village Bank.
“What makes me most angry is that no one has told us anything,” said Qian.
