China: Bank Run also in Henan. At the base, dangerous intersections of shareholdings between entrepreneurs and banks
News from China links economic factors and social control. Police are investigating the Henan New Wealth Group after depositors of some rural banks in the Chinese province of Henan, of which the company is a shareholder, discovered they could not withdraw cash.
The Henan New Wealth Group Financial Supervisory Bureau said in a June 18 statement: "Crimes of manipulation and exploitation of the online transaction systems of Yuzhou Xinminsheng Village Bank and other rural credit institutions have been preliminarily established. ".
In addition to rural banks, Yicai Global found that Henan New Wealth has also infiltrated some commercial banks in large urban centers. Lu Yi, its de-facto controller, used banks' holdings in various financial institutions to secure funds from them.
Lu controls hundreds of companies and their holdings cross each other, a person who worked at a Henan New Wealth subsidiary told Yicai Global, adding that Lu's name never appears on these companies' records.
Henan New Wealth even interfered with some banks' key decisions, such as appointing executives and board members, as the number of banks involved in the scheme increased. On closer inspection, the Chinese scandal is a classic of the early European banking period, when commercial banks were controlled by other groups who then used them for their own financial discoveries.
The same happened in China: for example, Boaosen Electrical Appliances and Bojue Commerce and Trade, of which Lu was the "invisible controller", own 1.8% and 3.6% of Henan Runan Rural Commercial Bank respectively. The two companies used their stakes in the bank as collateral for loans from two other lenders in which Lv had invested, according to corporate information platform Tianyancha. Basically, the companies used their holdings in the bank to get loans. You clearly understand that there are grounds for creating a huge financial hole: if something goes wrong, the value of the holdings falls and the loan guarantee disappears.
Of the bank's 188 shareholders, Boaosen Electrical and Bojue Commerce are not the only "shadow firms" linked to Lu and Henan New Wealth. Henan Fengjia Trade Development, another shareholder in the bank, has two owners, Chen Shouyong, a shareholder or executive of 16 companies, and Yuan Tianzhen, a shareholder or executive of 17 companies. There is practically a crossroads of holdings and companies that maneuver the rural banks and drive them to default.
Lu admitted to the Zhengzhou Intermediate People's Court that he actually controls and manages these companies. Now executives of Henan New Wealth Group companies are being investigated. How did they find out? Their health passes have turned… red preventing them from leaving the house or going to public places !!
This is just one of the various cases of intersection in the shareholdings between banks and entrepreneurs which then translate into a fall in the liquidity of the system and therefore the inability of the banks to repay customer payments. A disaster that multiplies the fear and runs to the counter.
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The article China: Bank Run also in Henan. At the base of dangerous crossings of shareholdings between entrepreneurs and banks comes from ScenariEconomici.it .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/cina-bank-run-anche-nellhenan-alla-base-incroci-pericolosi-di-partecipazioni-fra-imprenditori-e-banche/ on Mon, 27 Jun 2022 07:00:53 +0000.