Long queues outside a Sydney bank came as an ominous warning of what is happening in China, where hundreds of thousands of customers have found themselves unable to withdraw their own money.
Dozens of members of the public were spotted forming a long line each day outside the Bank of China’s Haymarket branch in the CBD.
The scene caught the attention of curious passers-by on Tuesday, one of whom shared a photo on Reddit seeking information on what it meant.
People are suspected of rushing to withdraw their funds from the bank after several Chinese banks were accused of defrauding investors.
Among the banks accused of harming their customers, four banks in China’s Henan province froze cash withdrawals in mid-April.
The move, which blocked billions of yuan in savings and sparked rare protests across the country, was believed to be a retaliatory move after regulators looked into allegations of mismanagement.
As Chinese regulators promised to reimburse victims, the side effects of the scandal were felt internationally, sparking concern of a global crisis.
It is understood Bank of China customers have been rushing to withdraw funds in a desperate attempt to avoid losing access if it chooses to freeze accounts as well.
“If you are already at the point where you think the Bank of China might go bankrupt and you need to withdraw your money now, you will not trust any bank. If the Bank of China went bankrupt, the 2008 global financial crisis will not would look like nothing,” wrote one Reddit user.
“Having said that, I don’t think the Bank of China is about to be in solvency risk, the main issue here is perception. If people think the bank might go bust and all of them are trying to pull out , it can create a self-fulfilling cycle because of how modern banks work,” they added.
Someone else remarked that “no modern bank can survive having all of its accounts called at once”.
Others suggested the rows were due to instability overseas, with one person saying the delays were more likely due to an influx of Chinese international students trying to open their bank accounts.
“Apparently, the Bank of China allows them to transfer money (tuition fees, living expenses) from their bank accounts in mainland China to an Australian bank account for free (international transactions usually have high transaction fees)” , said a Reddit user.
Trouble in China as major bank caught in fraud scheme
Chinese authorities have named the accused companies in Henan and another rural bank in neighboring Anhui province as being involved in a scheme to defraud investors, and promised the victims to start recovering their money.
“Henan New Fortune Group manipulated five village banks in Henan and Anhui to illegally absorb and occupy public funds…and covered up illegal activities,” an unnamed representative of the China Securities Regulatory Commission told media on Sunday. banks and insurance companies, citing an initial three-month police investigation. .
“The next step will be to start prepayment work for customers with more than 50,000 yuan (deposited).”
The Henan banking scandal has dealt an unprecedented blow to public confidence in China’s financial system due to the size and scale of the fraud, analysts say, with the banks involved operating illegally for more than a decade , the Chinese authorities are desperately seeking to avoid disturbances for social stability a few months before a major congress of the ruling Communist Party.
A mass protest on July 10 in Zhengzhou, capital of Henan province, was violently suppressed, with protesters forced onto buses by police and beaten, according to eyewitness accounts given to AFP and verified photos on social networks.
Shortly after, the Henan provincial banking regulator said customers with deposits of less than 50,000 yuan ($7,500) would be refunded from Friday.
But in a WeChat group containing hundreds of depositors, only a handful said they managed to recover their funds, according to messages seen by AFP.
A few customers said they received their deposits on Friday, while others complained that the designated mobile app had bugs and wouldn’t let them register, according to local media.
The funds repaid came from some of the seized assets of Henan New Fortune Group, the company accused by police of manipulating banks, state broadcaster CCTV reported last week.
Regulators said depositors would be paid in batches, but did not announce a specific time frame for refunding accounts with more than 50,000 yuan in funds.