BANK customers in China that have been protesting over a suspected billion-dollar financial scam will soon get at least some of their deposits back.
Clients from the 4 rural banks in the central province of Henan will be repaid in advance starting Friday (Jul 15), according to a statement posted on the banking regulator's local branch website late Monday.
Individuals with deposits of up to 50,000 yuan (S$10,450) will be repaid in advance first, with arrangements for the rest subject to further notice, the China Banking and Insurance Regulatory Commission (CBIRC) said.
The move came after police in China said they took more people into custody over the suspected scam as hundreds of angry bank customers took to the streets again over the weekend demanding the return of deposits worth up to tens of billions of yuan.
Videos circulating online showed protesters at a branch of the People's Bank of China in Zhengzhou, a city of about 10 million people, charged by a column of people who appeared to be plainclothes officers. The demonstrators hurled water bottles, tussles broke out, and at least one person was kicked and tackled. Another clip showed protesters holding up signs and shouting: "Return my money."
A probe by the CBIRC found that Henan Xincaifu Group Investment Holding, a private investment firm with stakes in the 4 lenders, colluded with bank employees to illicitly attract public funds via online platforms.
The regulator said it won't make repayments for accounts that are suspected to have involved illegal activities or received high interest from other channels, according to the notice.
The limited support comes as China has started to pare back the implicit government backstop for banks to reduce moral hazard and maintain long-term stability of the financial system. Smaller banks, faced with rising nonperforming loans after years of explosive growth and poor internal controls, are seen as particularly vulnerable.
China has nearly 4,000 small and medium-sized lenders that collectively control almost US$14 trillion in assets. But confidence in the nation's smaller banks has waned since 2019 when the government seized a lender for the first time since 1998 and imposed losses on some creditors.
Authorities have over the past few years disposed of 2.6 trillion yuan worth of bad debt at smaller banks, the CBIRC said in May. Beijing is also considering raising several hundred billion yuan for a stability fund to bail out troubled financial firms. BLOOMBERG