Another protest erupts over the billion-dollar bank fraud in Henan

Hundreds of people gathered before dawn on Sunday on the steps outside the People’s Bank of China building in Zhengzhou, Henan Province, in the latest clash over a banking scandal that sparked national outrage earlier this year.

“Henan Bank, return my savings!” chanted some of the protesters, with some calling on China’s No. 2 official and economic leader, Lǐ Kèqiáng 李克强, as they held up banners to demand the return of their frozen deposits worth up to tens of billions of yuan.

• Within hours, swathes of local security forces showed up to disperse the protesters, warning them that they were an illegal assembly, and would be detained if they refused to leave.
• Later videos posted on social media showed the scene turning violent: One video showed an unidentified team of men in plain black or white clothes — who many have speculated were part of security forces — being pelted with water bottles and other objects as they charged into the crowd.
• Another video showed individuals being shoved and dragged down the steps by the same plain-clothed men, with some protesters left with broken bones and eye injuries, according to the Financial Times.

The desperate customers have been locked in a months-long dispute with local lenders, after four small banks in Henan suddenly suspended online cash withdrawals in April, sparking panic among hundreds of their customers who feared they had lost their savings.

• Just three weeks earlier, authorities in Zhengzhou punished five officials for changing the health codes of more than 1,300 customers of the banks to red, a move that restricted their public movements and that many have called an abuse of the nationwide health code app that tracks users’ data.

​​Later that day, Henan banking authorities posted a short notice saying that authorities are speeding up the verification of customer funds in the four banks, and have since ordered payments of smaller amounts starting on July 15 with bigger payments to be made later.

• “​​On the surface, it looks like good news, but it is actually a frog in boiling water. If someone gets a part of it back, they will not fight for it anymore,” said one user on Weibo.
• “I am happy for the depositors, but at the same time I want to ask: Where do the advanced payments come from? If the funds cannot be recovered, who will pay for the 40 billion yuan?” said another.

Though authorities have so far accused Henan Xincaifu Group, a stakeholder in the four lenders, of colluding with bank employees to illegally attract depositors through third-party platforms, the case has highlighted the vulnerability of lenders in China’s less-developed areas amid growing financial risks in the world’s second-largest economy.

• “The central government needs to worry more now about the property sector issue spilling over into the regional banks,” said a Hong Kong–based trader in developer debt. “Regional banks have a lot more exposure to property than they would like to admit.”