Henan Province Authorities Respond to Rural Bank Run Reports

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Financial authorities in the central Chinese province of Henan have issued their first ever official response to reports that clients of local rural lenders had experienced difficulty making withdrawals or accessing online services, in a development that threatened to trigger a cascade of bank runs.

Henan’s banking and insurance regulator said that financial authorities at all levels in the province were cooperating with local public security agencies to investigate the matter.

According to Henan province authorities initial investigations had established that Henan New Wealth Group (Henan Xin Caifu Jituan) (河南新财富集团) had engaged in criminal manipulation and usage of the online transaction systems of rural banks including Yuzhou Xin Minsheng (禹州新民生), and that local authorities were currently investigating the whereabouts of funds.

China’s banking authorities previously announced that Henan New Wealth, a key shareholder in four rural county banks in the province, had colluded with internal and external parties to use third platforms to accept funds from the public in breach of criminal law.

According to banking authorities the company is already under criminal investigation by public security agencies, while the four rural county banks have resumed regular deposit and withdrawal operations.

On the afternoon of 18 June the Xuchang public security bureau also announced that it had launched a criminal investigation into Henan New Wealth in April of this year, which had established that the company’s real controller – a Mr. Xu, was the head of a criminal group suspected of severe legal breaches in relation to rural county banks that first commenced in 2011.

“The alleged criminal behaviour in this case was ongoing for a long period of time and involved many participants, and extremely complex details,” said Xuchang law enforcement.