China's Banking System is Collapsing

China's Banking System is Collapsing

Posted in the China Forum

First Prev
of 2
Next Last
Mirolyuba

Port Moody, Canada

#1 Dec 6, 2012
December 6, 2012, 9:12 PM HKT Fear and Loathing in China’s Banking System

A bank raises money from its customers to make an off-the-books investment packaged by a private investment company as a loan to a pawn shop, which in turn makes loans to companies that banks aren’t willing to lend to because they’re not comfortable with the credit risk.

Welcome to the wheels-within-wheels of China’s shadow banking system.


Reuters But the complexity being unwound by the recent default of a $22.5 million wealth management product sold by Huaxia Bank Co. to its customers doesn’t stop there. It turns out some of the customers at the beginning of the chain were investing with borrowed cash.

According to the husband of Pu Tingting, the Huaxia manager who the bank blames for the fiasco, he and his wife borrowed money from family and friends to invest in the product. For Ms. Pu that’s adding leverage to an already heavy burden of woes.

The 35-year-old Ms. Pu, who has a seven-year old son at home, has been in police custody since Nov. 29, according to her husband who hopes he’ll have her back before the end of the year.

It’s not the sort of year-end the family had planned. Ms. Pu was due to be accepted as a full member of the Communist Party this month after completing the standard year-long probation, her husband said.
...
Mirolyuba

Port Moody, Canada

#2 Dec 6, 2012
...
Wealth management products are typically short-term investment products that the banks market as high-yield alternatives to deposits. They’ve proven to be hugely popular among bank customers, tired of deposit rates that are artificially suppressed by the central bank. The banks disclose little about how the money is invested, but much of cash appears to be going to make loans, which could expose investors to the risk of losing their money if the loans turn sour.

Although Huaxia’s failed wealth management fund required a minimum investment of 500,000 yuan ($80,280) and most of the investors were well-off VIP customers, a lot of investors were hit hard by the default of the product.

Dai Huajuan, a 55-year old woman, had joined with 20 other investors to raise a combined 10 million yuan to invest.

“If they don’t give me back my money, I want to die,” she said while at a protest Tuesday.“I want to jump from a high building.”

Ms. Dai was one of about 50 protestors who gathered outside of Huaxia Bank’s branch in Shanghai’s Lujiazui financial district on Tuesday — the ninth day of protests over the default. On the two traditional Chinese-style stone lions framing the bank’s entrance, the protestors had attached speakers that blared out,“Huaxia Bank, give the money back.”

The protestors carried signs that read “scam” and “Huaxia Bank swindled us of our money we earned through blood and sweat.”(See video of the protests on WSJ’s WorldStream)

Wang Qiang, a 50-year old who put his income at 5000 yuan a month, said he was protesting on behalf of his father, who had invested hundreds of thousands of yuan in the scheme.

“Old people deposit their money with the bank and they think it’s safe,” he said.“But when you go the bank to get it back after at the end of the investment period the bank says ‘you have lost your money’.”
“I am not going to give my money to just anyone in the street or at the supermarket,” said Mr. Wang.“But if I did give money to a supermarket they would at least be responsible for their products. But this bank is a bandit.”

The following day, Ms. Dai and Mr. Wang attended a meeting for disgruntled investors hosted by a vice-president from Huaxia Bank at a hotel in Jiading, a suburb of Shanghai.

After the meeting Ms. Dai said the bank said it was conducting an investigation and would report to the banking regulator in two months, after which the regulator would tell it how to proceed.

Initially, Beijing-based Huaxia Bank said it had never approved the product, but in a meeting with about a dozen investors on Monday night, Huaxia officials said there was “some management oversight” of the product and said the bank will offer a “reasonable solution,” according to a person with direct knowledge of the bank.

“We were hoping the bank would commit to give us back our money, but they are still not prepared to do so,” she said.

Huaxia Bank did not respond to repeated requests for comment.

–Grace Zhu, Amy Li, Colum Murphy, Lingling Wei and Dinny McMahon

Like China Real Time on Facebook and Twitter for the latest updates.

Banks, Investment, Wealth

Mirolyuba

Port Moody, Canada

#4 Dec 6, 2012
"Wealth management products are typically short-term investment products that the banks market as high-yield alternatives to deposits. They’ve proven to be hugely popular among bank customers, tired of deposit rates that are artificially suppressed by the central bank. The banks disclose little about how the money is invested, but much of cash appears to be going to make loans, which could expose investors to the risk of losing their money if the loans turn sour."

Sounds exactly like "asset backed paper" that proved so disastrous in other countries!

Investments in CCP China?

ALWAYS "a pig in a poke"!
Mirolyuba

Port Moody, Canada

#5 Dec 6, 2012
"“Old people deposit their money with the bank and they think it’s safe,” he said.“But when you go the bank to get it back after at the end of the investment period the bank says ‘you have lost your money’.”
“I am not going to give my money to just anyone in the street or at the supermarket,” said Mr. Wang.“But if I did give money to a supermarket they would at least be responsible for their products. But this bank is a bandit.”"

People in China are waking up to reality, so a run on the CCP's fake banks is inevitably approaching.

Most depositors will likely never see a "fen" of their savings again.
CHINA HUMILIATED by CCP

Port Moody, Canada

#6 Dec 6, 2012
The bank vaults in China are EMPTY.

All the money was flushed down the CCP/SOE toilet!

Don't worry! The FREE WESTERN COUNTRIES will send FOOD AID to help the poor misgoverned and swindled Chinese people!
CHINA HUMILIATED by CCP

Surrey, Canada

#7 Dec 8, 2012
True! The decent people of the accountable, legitimate democracies will feed the poor starving victims of the dying Chinese Communist Party dictatorship.

Even Japan will send help.
UIdiotRaceMAKEWO RLDPEACE

United States

#8 Dec 8, 2012
US fed/US WALL STREET,US MILITARISISM/IMPERAILSIM. US westeren Apparutus like the IMF, World BAnk, NATO... will soon be tumbling into deep hell.

Reply »
|
Report Abuse
|
Judge it!
|
#10
4 min ago

The World masses who stand for world human rights, World peace...will be winners! One for the world masses, Justice is on those who stand foe World peace ans stability! Hooray! DING DONG Evil will go to hell!
Hope this will ROCK ALL YOUR LITTLE BOATS especually those who support evil Bush & Co! BWHAHAHHAAHHAA

THE world in power already know about US evil cabal deeds and 9/11, 3/11...
The US Pentagon Obama & co , Good CIA, MI6 are now working with 150 nations BRIC group , White Dragon, and International Criminal Court are looking for biggest criminal cabal NEOCONS Bush & co, Rothchilds, Rockfellers, US NeoCons ... this group are cause of all ills around the globe
Western Puppets like Japan and S.Korea ....will soon drop out from warmongering western controls
Already over 150 nations BRIC group will be working together and had enough of the war mongering bullying US Militarism/imperialism agendas with its western allies left to defend its dying warring Western cabal ... asking Western nations to Give up the criminal western Cabal , the world Corrupted Power elite WAR Mongering groups like Bush &co , RockerfellerS, Rome Club,US NAzi, Zionist ,US NeoCons,US neo Malthusian , the radical US right as this evil Western cabal had been causer of most of the world problems for over a century or more. You know who you are! MirolubyA and others who support this legendary evil criminal Western warring cabal will sooner or latter see justice for war crimes against humanity.
You Shills, have no where to run !MWHAHAHHHAAHAHaaaaa
CHINA HUMILIATED by CCP

Surrey, Canada

#9 Dec 8, 2012
It is obvious to everyone on earth that a tsunami of talent has been fleeing mainland China for years, along with the CCP thieves moving their loot and family overseas.

Everyone who CAN leave,does, and that includes the CCP themselves.

For them, it is "take the money and run".

They also send fools paid nickels to cover their flight with "anti-imperialist" propaganda laughed at for decades, apparently.
OVERTHROW COMMUNIST PARTY

Surrey, Canada

#10 Dec 10, 2012
The bank vaults in China are EMPTY.

All the money was flushed down the CCP/SOE toilet!

Don't worry! The FREE WESTERN COUNTRIES will send FOOD AID to help the poor misgoverned and swindled Chinese people!
Mirolyuba

Port Moody, Canada

#11 Dec 11, 2012
When I visit, my friends in China now ask me to trade their RMB in Hong Kong for USD, and they hold their USD in cash.

They are smart.
Stranger

Stockport, UK

#12 Dec 11, 2012
Like you got friends
Stranger

Stockport, UK

#13 Dec 11, 2012
The obe thing the CCP is doing well is the economy.

Miro woukd flush the toilet on Chinas economy,shes that blunt.

But China needs much more freedom and accountability, voting etc.

But dont listen to government stooges like Miro.
Stranger

Stockport, UK

#14 Dec 11, 2012
Miro is a paid liar. This is highly probable. Its the only thing that ahole bigot redneck Fargo got right.
OVERTHROW the CCP

Surrey, Canada

#15 Dec 11, 2012
HA HA HA HA HA HA HA!

I love it how these weak little stooges of the Chinese Communist Party always claim their critics are "actually working for the CCP!" after GETTING THEIR ARSES KICKED!

These communists are like simple-minded little children!

TOO FUNNY!

Hey!

Fuhk the incompetent, murdering, corrupt Chinese Communist Party!

Do I work for them TOO now?

HA HA HA HA HA HA!
Drgunzet

Meridian, ID

#16 Dec 11, 2012
Did anyone analyze how much of the capital tied up in the real estate would reflect in the bad debts for Chinese banks?

I don't know how much China can delay the real estate bubble from bursting. That will reveal the banking problem in China. This cascade failure will also reveal the High Speed Train's capital and banking's bad debt as well.

It's a no brainer to see an economy which rely on 25% of its GDP on real estate and 12 on High Speed Train. Such two sectors are just too disproportional for any stable economy.

P.S. I would recommend China to keep both of those sectors to be under 10%.
CHINA HUMILIATED by CCP

Surrey, Canada

#17 Dec 12, 2012
Yes, an obvious crash is coming in China.

Chalk it up to "bad management".
Stranger

Stockport, UK

#18 Dec 12, 2012
Im saying you work for ypur own government. And if i was CCP why would i insult their darling,Fargo? Youve followed my posts, ive said many things against Ray and CCP darling Ol China.

And you still think it makes sense to xall me a CCP lackey ir stooge? Are you that challenged or simple minded?
Stranger

Stockport, UK

#19 Dec 12, 2012
Miro they are more competent than you. Can you manage 1.3 billion people with an 8 percent GDP?

I know you can lie, but you work for your government. No one is that stupid for free.
CHINA HUMILIATED by CCP

Surrey, Canada

#20 Dec 12, 2012
Yes, an obvious crash is coming in China.

Chalk it up to "bad management".

They are morons.

See the half-wit Chinese Communist Party CLOWNS spinning in circles to find some "foreign enemy" to blame for THEIR OWN FAILURES and THEIR OWN CRIMES AGAINST THE CHINESE PEOPLE?

These ridiculous Stalinist throwbacks have lost EVERY ARGUMENT and have been exposed as cheap exploiters and crooks, so now the "CIA" or the "NED" or some other enemy of genocidal tyranny must be paying to achieve the results due entirely to their own traitorous idiocy and guilt, and the fact that there are still people like me who care for the people of China and will stand up for them.

We both know the CCP cuts off any poster from China with thoughts critical or independent of the CCP regime. You like that, do you?

Boo Hoo! I have spoiled their little "wu mao" boardwashing game!

Better call in EVEN MORE REINFORCEMENTS from the Beijing "propaganda organs" , "Comrade", you're going to need them!
Stranger

Stockport, UK

#21 Dec 12, 2012
I apologise.

Tell me when this thread is updated:

Subscribe Now Add to my Tracker
First Prev
of 2
Next Last

Add your comments below

Characters left: 4000

Please note by submitting this form you acknowledge that you have read the Terms of Service and the comment you are posting is in compliance with such terms. Be polite. Inappropriate posts may be removed by the moderator. Send us your feedback.

China Discussions

Title Updated Last By Comments
News China warns people to shun practise of Islam, s... 18 hr naman 7
News Dems howl over China's Dog Meat Festival Thu Bama Yankee 1
News Pink Panther actor Burt Kwouk dies aged 85 May 24 Old Sam 1
Are Northeast Indians ethnically same as Chinese? (Feb '10) May 22 we R not filthy I... 77
News College student detained in China for allegedly... May 20 Test 2
Are Chinese Barbaric? (Nov '07) May 17 suzlesterbeach 692
News Palestinian protester shot by Israeli troops dies (Aug '15) May 17 idf 11
More from around the web