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2022-06-14 06:40:33

People who have arrived in Zhengzhou to withdraw money from embattled regional banks said they have found their health codes turn red — a label mostly reserved for potential COVID-19 carriers or those infected with the virus — after arriving in Henan province’s provincial capital, prohibiting them from accessing transportation networks, public services, and even going to the banks to lodge their grievances.

Thousands of depositors have attempted to withdraw money in person from at least four of Henan’s regional banks with tens of billions of yuan in frozen deposits since April. The move came after Sun Zhenfu, a shareholder of one of the banks, fled following “serious financial crimes” in March, according to media reports.

The banks withholding the deposits include Yuzhou Xinminsheng Village Bank, Zhecheng Huanghuai Community Bank, Shangcai Huimin County Bank, and New Oriental County Bank of Kaifeng, with Sun reportedly having indirect associations with all of them. Some 1 million customers are said to be affected.

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At least 12 depositors Sixth Tone spoke with said their health code turned red when they scanned city-specific QR codes at railway stations, hotels, and other venues that required them. China tracks residents’ locations with national and local health apps as part of its COVID control measures, which limit mobility when codes turn yellow or red.

Many of the depositors said they had traveled from the eastern provinces of Zhejiang and Shandong, as well as Hebei in the north, to Zhengzhou to demand answers and attempt to retrieve their deposits.

Wang Jin, from Zhangjiakou in Hebei, is among them. The 35-year-old said he came to Zhengzhou hoping to retrieve his savings from Yuzhou Xinminsheng Village Bank on Sunday, but ended up at the police station until the following day when his health code turned red while scanning a QR code to exit the city’s railway station.

He had last checked his health code 30 minutes before arriving in Zhengzhou, and it was still green then.

“The police officers confirmed that the frozen money was a legitimate deposit, but prohibited us from going to the local banking and insurance regulatory commission to inquire about this issue,” Wang told Sixth Tone on Monday afternoon. “We have reasonable and legitimate claims, but they used the red code as a reason to restrict us. They said our health codes will turn green when we leave, and until then we need to stay at the police station.”

The four banks are still open for business and some of them with smaller deposits were able to withdraw money from the bank, though the ATMs weren’t working, depositors told Sixth Tone.

One depositor from the eastern city of Ningbo with over 10 million yuan ($1.5 million) in savings said he went to New Oriental County Bank of Kaifeng on Sunday. His health code was already red then and the man was accompanied by six police officers. He couldn’t withdraw any money.

Several commercial and rural banks, as well as cooperatives, across China started offering fixed deposit products after the country enacted its deposit insurance scheme in May 2015. An insurance foundation was set up so that depositors will be paid up to 500,000 yuan if any bank files for bankruptcy, which attracted many clients as it guaranteed the security of savings.

All four financial institutes with frozen funds are small, locally focused banks designed to serve rural populations. But they had expanded their reach nationally online through the help of fintech platforms like JD Digits, backed by e-commerce giant JD.com, and Du Xiaoman Financial from internet behemoth Baidu. Smaller platforms such as Binhai Financial and Wacaibao were also involved.

The banks attracted clients with higher interest rates on fixed deposit products. In fixed deposits, customers commit to leaving their money in the bank for a certain amount of time in return for higher interest. These banks paid around 4.3% on fixed deposits that could be rolled over for up to five years, according to receipts provided by depositors.

By contrast, the Industrial and Commercial Bank of China, one of China’s “Big Four” state-owned lenders, offers only 3.15% annual interest on a five-year deposit product.

But in January 2021, China’s banking and insurance regulators banned all banks from offering long-term fixed deposits on third-party fintech platforms, saying “banks needed to improve their risk estimates and risk management.” Authorities said some smaller and regional banks were using large amounts of money gathered from internet platforms to issue loans to local enterprises with insufficient qualification.

Since then, JD Digits and Du Xiaoman removed all interest-bearing time deposit products from their apps. But the four Henan-based banks reached out to their existing customers directly and convinced them to download the banks’ apps in order to deposit even more money, according to text message screenshots provided by depositors Sixth Tone spoke with.

After news spread that the four banks weren’t releasing their clients’ deposits, hundreds of clients traveled to Zhengzhou hoping for more information. On May 23, around 800 depositors visited the local banking and insurance regulatory commission but were sent back to their hometowns by local police, a depositor from the northern province of Shanxi who participated in sit-in protests told Sixth Tone.

By then, the People’s Bank of China had already said that “relevant departments have launched investigations” into the four banks. In a April 25 statement, the central bank said it “will cooperate with relevant departments to protect the legitimate rights and interests of financial consumers in accordance with the law.”

Weeks later, many depositors are still waiting for concrete answers from the authorities. And those who have decided to travel to Zhengzhou and demanded action said certain measures to protect public health are instead being used against them.

“This is using the country’s epidemic prevention policy to prevent the people from seeking justice for themselves,” Wang said, referring to the health code. “Our family’s 420,000 yuan is now frozen, almost all of our savings. I need the money urgently, my parents need medicine, my two children need to go to school, and the family has a big financial burden.”

Wang is now back in his hometown in Zhangjiakou after police officers made him return Monday evening. Close to midnight, when he was on the train and nearly home, his health code turned green.

Editor: Bibek Bhandari.

(Header image: People gather at a branch of Yuzhou Xinminsheng Villlage Bank after discovering they couldn't withdraw money, Yuzhou, Henan province, 2022. From Weibo)