Three banks in China’s central Henan province have frozen at least $178 million in deposits, with no explanation as to why or for how long, depositors told reporters, leaving businesses unable to pay employees and depositors.
On April 18, Yu Zhou Xin Min Sheng Village Bank, Shanghai Huimin Country Bank, and Zhecheng Huanghuai Community Bank froze all deposits, citing the need to upgrade internal systems. Depositors claim that the banks have not communicated the situation since then.
Reporters reached out to the three banks for comment but received no response.
China’s numerous local banks, while ostensibly small, have outsized relevance since they lend to small and mid-sized businesses, and their activities can be used to gauge the health of the world’s second-largest economy behind the United States.
Due to reduced business activity brought on by rigorous COVID-19 containment measures, bank profitability and asset quality are largely predicted to decline, boosting the risk of economic contraction in the second quarter of the year.
Depositors at the three banks told reporters that they had been communicating on how to collect funds via the messaging app WeChat. Some people uploaded screenshots of frozen accounts and talked with bank employees on social media.
Some people shared videos of protests outside bank branches, while others claimed they went to the banks’ headquarters in search of answers only to be turned away by police.
The China Banking and Insurance Regulatory Commission, which was quoted in the media as saying it was investigating the matter on May 1, and the People’s Bank of China, the central bank, did not respond to faxed requests for comment.
ANGRY Depositors from southern Zhejiang province communicated over WeChat and reported 1.2 billion yuan ($177.55 million) in frozen funds across the three banks, according to a spreadsheet seen by reporters.
Because the banks have customers all around China, the frozen funds might exceed $1.5 billion, according to Caixin magazine on April 30.
Jerry Chang, the owner of a plant in Hubei province, is unable to access funds placed at Yu Zhou Xin Min Sheng Village Bank.
“Not being able to withdraw money has a major impact on our factory’s operations, including procurement and workers’ wages,” said Chang, who utilized the bank because of its 1.85 percent interest rate.
Tony Qian, a Zhejiang investment expert, is unable to access the 20 million yuan he saved in Yu Zhou Xin Min Sheng Village Bank in order to purchase a property.
“What irritates me the most is that no one has explained anything to us,” Qian remarked.
