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Chinese Bank On Verge Of Collapse After Sudden Bank Run
Chinese Bank On Verge Of Collapse After Sudden Bank Run
First it was Baoshang Bank , then it was Bank of Jinzhou, then, two months ago, China’s Heng Feng Bank with 1.4 trillion yuan in assets, quietly failed and was just as quietly nationalized. Today, a fourth prominent Chinese bank was on the verge of collapse under the weight of its bad loans, only this time the failure was far less quiet, as depositors of the rural lender swarmed the bank’s retail outlets, demanding their money in an angry demonstration of what Beijing is terrified of the most: a bank run.
Local business leaders, political cadres and banking executives rallied Thursday at the main branch of Henan Yichuan Rural Commercial Bank, just outside the central Chinese city of Luoyang, where they stood one by one before a microphone to pledge their backing for the bank, as smiling employees brandished wads of cash before television cameras to demonstrate just how much cash, literally, the bank had.
It was China’s latest, and most desperate attempt yet to project stability and reassure the public that all is well after rumors spread that the bank’s chairman was in trouble and the bank was on the brink of insolvency. However, as the WSJ reports, it wasn’t enough for 31-year-old Li Xue, who showed up for the third day Thursday to withdraw thousands of yuan of her mother’s life savings after hearing from fellow villagers that Yichuan Bank – which is the largest lender in Yichuan county by the number of branches and capital, and it is also a member of PBOC’s deposit insurance system, according to the local government – was going under.
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Half The World’s Banks Won’t Survive The Next Crisis, McKinsey Finds
Half The World’s Banks Won’t Survive The Next Crisis, McKinsey Finds
More than half of the world’s banks are at risk of collapse in the next global downturn if they don’t start preparing for late-cycle shocks, McKinsey & Company warned in its latest global banking outlook.
The consultancy firm warned on Monday, in a 55-page report titled The last pit stop? Time for bold late-cycle moves, that 35% of banks globally are “subscale” and will have to merge or sell to larger firms if they want to survive the next crisis.
“A decade on from the global financial crisis, signs that the banking industry has entered the late phase of the economic cycle are clear: growth in volumes and top-line revenues is slowing, with loan growth of just 4% in 2018—the lowest in the past five years and a good 150 basis points (bps) below nominal GDP growth. Yield curves are also flattening. And, although valuations fluctuate, investor confidence in banks is weakening once again,” McKinsey said.
Kausik Rajgopal, a senior partner at McKinsey, told Bloomberg that “we believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape,” adding that, “in the late cycle, nobody can afford to rest on their laurels.”
The report warned that 60% of global banks are experiencing “returns below the cost of equity.” And even warned that when the next recession strikes, “negative interest rates could wreak further havoc.”
McKinsey said fin-tech startups are rapidly evolving the industry, and legacy banks risk “becoming footnotes to history” if they don’t immediately invest in technology. For instance, the report said, Amazon and Ping An are two technology firms that are quickly acquiring market share from the traditional banking sector.
Chinese Bank With $100 Billion In Assets Is About To Collapse
Chinese Bank With $100 Billion In Assets Is About To Collapse
While the western world (and much of the eastern) has been preoccupied with predicting the consequences of Trump’s accelerating global trade/tech war and whether the Fed will launch QE before or after it sends rates back to zero, Beijing has quietly had its hands full with avoiding a bank run in the aftermath of Baoshang Bank’s failure and keeping the interbank market – which has been on the verge of freezing – alive.
Unfortunately for the PBOC, Beijing was racing against time to prevent a widespread panic after it opened the Pandora’s box when it seized Baoshang Bank, the first official bank failure in an odd replay of what happened with Bear Stearns back in 2008, when JPMorgan was gifted the historic bank for pennies on the dollar.
And with domino #1 down, the question turned to who is next, and could it be China’s Lehman.
As a reminder, back in May, shortly after the shocking failure of China’s Baoshang Bank (BSB), and its subsequent seizure by the government – the first takeover of a commercial bank since the Hainan Development Bank 20 years ago – the PBOC panicked and injected a whopping 250 billion yuan via an open-market operation, the largest since January. Alas, as we said at the time, it was too little to late, and with the interbank market roiling, with Negotiable Certificates of Deposit (NCD) and repo rates soaring (in some occult cases as high as 1000%) we said that it’s just a matter of time before another major Chinese bank collapses.
We Are Neutral on Chinese Equities, Says Bank of Singapore’s Malik
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How Iceland Escaped From The One Bank
How Iceland Escaped From The One Bank
What have the governments of the corrupt Western bloc spent most of their time doing since the Crash of ’08? We can answer this question in three parts:
1) Creating increasingly falsified “statistics” to fabricate the illusion that their economies were not on the verge of all-out economic collapse;
2) Hacking and slashing every social program in sight in order to generate the false savings known as Austerity; and
3) Creating new funny-money and taking on new debt at an exponentially increasing rate in order to delaycollapse, since all that Austerity accomplished was an acceleration of these death spirals.
Making these points apparent to newer readers will require additional elaboration. The starting point is the Crash of ’08 itself. What caused these nations to go from being merely heavily indebted to hopelessly insolvent overnight? That can be summed up in a single euphemism of fraud and crime: “too big to fail.”
At the end of 2008, the West’s puppet governments succumbed to History’s ultimate act of blackmail at the hands of History’s largest and most rapacious crime syndicate: the One Bank . “Give us all your money, or we’ll blow up your entire financial system.” That is the real meaning of “too big to fail”: institutionalized extortion, in perpetuity.
What was the real price tag for this massive extortion operation? Forget the phony numbers published by our corrupt governments and their mouthpieces in the corporate media. The total quantum for these extortion payments was in the tens of TRILLIONS . Obviously the Deadbeat Debtors of the West couldn’t raise more than a tiny fraction of that amount of blackmail money up front. Thus, most of this shakedown of (supposedly) sovereign governments came in the form of future tax breaks and “loss guarantees.”
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