China’s Nanjing Bank became insolvent: What has happened to Depositors’ Money?

On the morning of September 2rd, social media reported that the Nanjing Bank has become insolvent and depositors could not withdraw money. Nanjing Bank is a clearing bank for Henan Rural Bank. What will happen to the depositors’ money?

According to the Yicai Global report, on the morning of September 2rd, there were news on Weibo social platform reporting that Nanjing Bank Zhejiang Branch has become insolvent and the bank had closed shop, leaving depositors not able to withdraw their money.

Local people in Hangzhou learned from nearby merchants that people gathered outside the bank in the morning as a result of failing to withdraw more than 500,000 yuan. This was then followed by the arrival of the police to “persuade” the gathered crowd to leave the scene. This Nanjing Bank insolvency has created a knock-on effect on the Henan Rural Bank because Nanjing Bank had previously announced that it was acting as a liquidator for Henan Rural Bank. However, Nanjing Bank stressed that, as a commercial clearing bank, it does not have obligation or responsibility for the loss of funds for Henan Rural Bank’s negotiated instruments (NIs). i.e. the risk is all bear by the Rural Bank.