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| Policemen try to calm customers crowding the entrance of a branch of Hong Kong's Bank of East Asia Photo: AFP/Getty |
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Run on Hong Kong Bank
Telegraph, UK
September 23, 2008
Panicked customers queued to withdraw their savings from branches of the Bank of East Asia in Hong Kong as rumours circulated that the bank was facing financial problems, agencies reported.
Panicked customers queued to withdraw their savings from branches of the Bank of East Asia in Hong Kong as rumours circulated that the bank was facing financial problems, agencies report.
The rumours were categorically denied by the bank's management, which nevertheless had to extend business hours by 30 minutes to cope with the queues of anxious customers.
The Bank of East Asia (BEA), owned by one of Hong Kong's wealthiest families, blamed "malicious rumours'' that it said had been circulating in the market since Monday and questioned the bank's financial stability.
The bank, Hong Kong's third-largest lender, said it had asked police to investigate. The shares fell 11pc.
"The management of BEA hereby states in the strongest possible terms that such rumours have no basis in fact," BEA said in an e-mailed statement. "The bank's financial position is sound and stable."
Hong Kong's central bank said it would provide liquidity to Bank of East Asia if necessary and reiterated that the bank and the city's banking system were sound.
"I can confirm categorically that these rumours are unfounded," Joseph Yam, Chief Executive of the Hong Kong Monetary Authority, told reporters, referring to rumours about Bank of East Asia's financial stability.
"The banking system of Hong Kong is very robust," he added.
The BEA's statement said the bank had assets of more than $50bn in June and its capital adequacy ratio was 14.6pc - a level it described as "well above the international required level''.
It said the bank's total exposure to the collapsed US investment bank Lehman Brothers and American International Group, the world's largest insurer that was bailed out last week, was HK$422.8m (�29m) and HK49.9m, respectively.
The assurance did little to calm the bank's customers, however, who feared the bank might be another casualty of the global credit crunch and flocked to its 130 city branches to withdraw money.
"We're a little bit concerned," said Sonny Hsu, a Hong Kong-based analyst at Fitch Ratings, told Bloomberg. "We'll keep an eye on what's going on. If you just look at the numbers, I think the bank is financially still sound."
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