Type to search

Fears Over Evergrande Debts Spurs Run on China Bank – CNN

Officials call for calm after people line up to withdraw money from the Bank of Cangzhou in Hebei province amid fears over billions lent to property giant Evergrande, which may face liquidation

Trading in China Evergrande and its property and EV units was suspended on Thursday amid concern that the group may face liquidation.
The logo of China Evergrande is seen at its former office in Hong Kong. People moved to withdraw their money from the Bank of Cangzhou in northern Hebei province this week amid concern it could lose billions of yuan lent to the embattled Evergrande. File photo: Reuters.


The problems in China’s debt-laden property sector – and the potential collapse of two giant developers with combined debt of over half a trillion dollars – have begun to spill over into the country’s financial system.

Banking officials have called for calm after concern over massive unpaid debts accumulated by China Evergrande sparked a run on a regional bank in northern China this week.

Depositors lined up to withdraw their money from the Bank of Cangzhou in Hebei province, according to CNN, which cited multiple state media outlets, plus photos and videos posted online this week.


ALSO SEE: US May Ban AI Chips to Chinese Firms Located Overseas


Local police arrested ‘many people’ suspected of spreading rumours that the bank was suffering a cash crunch because of its exposure to Evergrande, Yicai state media outlet reported on Wednesday.

“Posts on Chinese social media reviewed by CNN claimed that the Bank of Cangzhou had lent billions of yuan in loans to Evergrande”, CNN reported.

Evergrande, which defaulted on its debts in December 2021, was once the country’s biggest private developer, but now appears to be facing forced liquidation because its plan to restructure debts of about $329 billion has failed, while its founder Hui Ka Yan (aka Xu Jiayin) has been detained amid suspicion of crimes by the group.


‘Make rational judgements’

Officials in Cangzhou city insist that the operations of the regional bank, which reportedly had assets of over 246-billion yuan ($34 billion) at the end of September, are sound and that people’s deposits are safe, Yicai said, citing a statement posted at the bank’s entrance.

It urged consumers to “make rational judgements and to avoid losing interest on your deposits due to rumours”.

However, China has a checkered record in regard to banking crises, as well as public disclosure.

Large protests were staged in Zhengzhou in Henan province in the middle of last year because multiple rural lenders had frozen their accounts and denied people access to their deposits, said to have totalled up to $1.5 billion.

Top financial officials appear to be keen to hose down any speculation about government support, or lack thereof, for the country’s banks.

The China Daily reported on Friday that Central Huijin Investment, an arm of China’s sovereign wealth fund, had increased its stake in the country’s four biggest commercial banks.

The logo of Chinese developer Country Garden is seen at Shanghai Country Garden Center (Reuters).

Founders lend Country Garden $300m, try to sell 2nd jet

Meanwhile, the founding family of Country Garden recently loaned the embattled developer $300 million interest free, and the family was also trying to sell its private jet, Chinese online news outlet The Paper, reported on Friday.

Citing insiders, The Paper said the family was seeking to support liquidity for China’s largest private property developer, which has missed coupon payments on some dollar bonds since last month, but has not defaulted despite total debt of $192 billion.

Another online news outlet, Cailianshe, reported earlier that founder Yeung Kwok Keung had already sold a new jet and was trying to sell another.

Country Garden declined to comment.

The company this week warned of its inability to meet offshore debt obligations, potentially joining a growing list of Chinese developers that have defaulted and setting the stage for one of the country’s biggest debt restructurings.

Country Garden’s 30-day grace periods to make the missed coupon payments will start expiring next week.

A video posted on Country Garden’s official WeChat account on Friday showed Yeung and president Mo Bin inspecting a development site close to its headquarters in Shunde, Guangdong province, two days ago.

The WeChat post also cited company chairperson Yang Huiyan, Yeung’s daughter, saying in a monthly internal meeting this week that Country Garden has to ensure home completions and business operations, and also enhance its high-tech construction business.


  • Jim Pollard with Reuters


NOTE: This report was amended on October 13, 2023 to update the figure on the Bank of Cangzhou’s assets.




China’s Private Real Estate Giants Teeter Near Collapse


Beijing Seen Taking Over China Evergrande’s Debt Revamp


China Evergrande Chairman ‘Suspected of Crimes’, Company Says


Hui Ka Yan and The Rise and Fall of China Evergrande


China Evergrande Files Claim in US Court to Protect Its Assets


China’s Country Garden Stocks Plunge on Foreign Debt Warning


The Pledge That Brought Country Garden to the Brink of Default


Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


AF China Bond