How rumor sparked panic and three-day bank run in Chinese city
By John Ruwitch
YANCHENG, China (Reuters) - The rumor spread quickly. A small rural lender in eastern China had turned down a customer's request to withdraw 200,000 yuan ($32,200).
Bankers and local officials say it never happened, but true or not the rumor was all it took to spark a run on a bank as the story passed quickly from person to person, among depositors, bystanders and even bank employees.
Savers feared the bank in Yancheng, a city in Sheyang county, had run out of money and soon hundreds of customers had rushed to its doors demanding the withdrawal of their money despite assurances from regulators and the central bank that their money was safe.
The panic in a corner of the coastal Jiangsu province north of Shanghai, while isolated, struck a raw nerve and won national airplay, possibly reflecting public anxiety over China's financial system after the country's first domestic bond default this month shattered assumptions the government would always step in to prevent institutions from collapsing.
Rumors also find especially fertile ground here after the failure last January of some less-regulated rural credit co-operatives.
Jin Wenjun saw the drama unfold.
He started to notice more people than usual arriving at the Jiangsu Sheyang Rural Commercial Bank next door to his liquor store on Monday afternoon. By evening there were hundreds spilling out into the courtyard in front of the bank in this rural town near a high-tech park surrounded by rice and rape fields.
Bank officials tried to assure the depositors that there was enough money to go around, but the crowd kept growing. Continued...