Chapter 433 The beginning of the run on Hang Seng Bank
After the time entered 1965, Hong Kong's real estate market also began to gradually cool down. In the fourth quarter of 1964, the total transaction volume dropped significantly. Together with the Hong Kong government's auctions, although there were no unsold auctions, real estate companies Enthusiasm for bidding is also gradually declining.
On January 22, early in the morning, Yang Wendong had just arrived at the company, but he saw Zheng Zhijie already waiting beside the assistant's desk at the door of the office. After seeing his boss, he also quickly came over and said: "Yang Sheng, something happened in the banking world yesterday. A big event, a check of HKD 8 million issued by Mingde Bank was dishonored.”
"Refuse to pay?" Yang Wendong's heart moved, and then he said: "Go in and say, Aying, serve two cups of tea."
"Yes." Assistant Aying quickly agreed.
After the two entered the office, they sat down on the sofa next to the floor-to-ceiling window. Yang Wendong immediately asked: "Is there something wrong with the funds of Mingde Bank?"
Historically, the banking crisis in 1965 was caused by the capital problems of Matilda Bank, which led to a run and ultimately the collapse of all Chinese banks in Hong Kong;
Even the subsequent crisis in the real estate market was caused by this incident. It is probably because of this that the cash-out of Changxing Real Estate last year did not cause much response. At most, some people became more cautious, and the real estate market cooled down in advance. But it didn't cause a crash.
Zheng Zhijie shook his head and said: "I don't know, the whole market is speculating now. It is said that the real estate company Mingde Bank cooperates with has problems, resulting in the inability to recover the funds;
But the news of this refusal has spread throughout Hong Kong, and I estimate that there may soon be a run similar to that of 1961. ”
"Then wait and see what happens." Yang Wendong nodded and said, "I have also heard that the real estate market has been booming in the past two years, and many banks have made illegal profits. It is inevitable that this situation will happen now."
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Banks do have risk management and control, but bank accounts are far behind. In essence, bank accounts are just a lending company, similar to P2P on the Internet in the past, and the Hong Kong government itself is also implementing a "free market" policy and doesn't care at all.
In 1961, there was a run on Liao Chong Hing Bank, which caused the Hong Kong government to slightly restrict the banks, but after a year or two, they stopped caring about it.
When the real estate market explodes, banks also want to get a share of the pie. Naturally, the more loans, the better. Many real estate companies even increase interest rates in order to increase leverage, which makes many banks and even banks take the initiative to take risks. To make more money
Without controlled capital, it is unimaginable that they would dare to do stupid things for the sake of huge profits. What's more, like many real estate companies, they also have enough confidence in the Hong Kong real estate market.
Zheng Zhijie nodded and said: "Yes, even last year, many banks wanted to cooperate with us, and the conditions they proposed were very tempting; if it hadn't been for Yang Sheng's order to shrink, I might have cooperated with them."
"The last madness is like this." Yang Wendong nodded and said.
Zheng Zhijie continued: "There are also new banking regulations promulgated by the Hong Kong government at the end of last year, which also restrict banks."
"It is also appropriate for the Hong Kong government to gradually tighten restrictions on banks." Yang Wendong added: "In this way, you can keep an eye on the Mingde Bank during this period, but do not interfere and see how this matter develops."
In fact, with only 8 million Hong Kong dollars, if Yang Wendong steps forward at this moment, he can easily save Mingde Bank, but it is impossible to say that this can change history.
The run on Mingde Bank was just the trigger of the banking crisis in Hong Kong, not the essence. Nowadays, real estate prices are falling, and many banks and banks will have problems recovering the funds released by them. If he saved Mingde today, he will not be able to recover tomorrow. There may be other bank accounts or bank accidents. It is impossible for him to save everyone, and he has no obligation.
He even felt that there was a big force behind this matter. There was no benefit to it, and there was no need for him to get involved. He would just wait and see what happened and talk about it when the time comes.
Zheng Zhijie agreed and said: "Okay."
Yang Wendong asked again: "How much deposit do we have in the Chinese banks in Hong Kong?"
"Most of it has been transferred according to your order." Zheng Yuhua said: "But it has not been completely transferred. There are still more than 10 million in Bank of East Asia and Hang Seng Bank. These two banks are also authorized by you."
"Okay, I understand." Yang Wendong nodded and said, "It is indeed inconvenient for us to transfer all the funds."
Bank of East Asia and Hang Seng Bank were relatively well-known banks in their previous lives. They had sufficient foundations and had no major problems themselves. Even if there was a real run problem, they could still be saved. After all, HSBC did not annex Hang Seng because it wanted to save them. Economy, but Hang Seng itself is a piece of fat, and the Bank of East Asia is actually similar.
So it’s okay to put some of your deposits in it. Even if history remains unchanged, HSBC will recognize its debt after annexing Hang Seng.
In the next few days, Yang Wendong also paid attention to the developments in Hong Kong’s banking industry;
The reason why Mingde Bank refused to pay was quickly exposed by insiders. It was because there was no money in the account. The bank itself was not large and a large amount of funds had been released. Who would have thought that there would be 8 million in deposits? Asking to be transferred?
You know, with such a large bank deposit, even the business manager of HSBC must treat this customer as an uncle. In Hong Kong, there are still people depositing 8 million in cash. In the past few years, it was an era of picking up money. 8 million With a little cash leverage, tens of millions of funds can be mobilized. Many listed companies do not have so much cash.
And such a large deposit can be safely deposited in Mingde Bank? .All this looks strange.
Soon, a large number of people queued up to withdraw money from the Mingde Bank. For many people, what happened in 1961 is still vivid in their minds; after that, many large depositors also went to withdraw money, and their deposit certificates were easily Two to three hundred thousand or even more than 500,000, Mingde Bank relied on high interest rates to attract them in the early years. But after it was taken in, it must be loaned out. Otherwise, how would the interest be paid?
But now that so many people are withdrawing money, Mingde Bank has problems with its own funds, so on the 24th, it immediately ran out of money and its account was empty.
When the news came out, more depositors went to withdraw money, and the traffic in front of the headquarters of Mingde Bank was paralyzed. This incident quickly attracted the attention of the Hong Kong government, which immediately took over the Mingde Bank, and then promised to take care of all deposits. guarantee.
In the end, the run on Mingde Bank officially ended. Everyone still believed in the Hong Kong government, and the matter came to an end. However, the seeds of doubt had been planted and it was impossible to remove them.
The Spring Festival of 1965 is coming.
The Yang family lived a peaceful Spring Festival as in previous years, and there was another big happy event during this year's Spring Festival, that is, the Dongjiang Water Project in the Mainland was finally completed.
A large amount of Dongjiang water was connected with the Hong Kong Water Company. For a time, the water pressure of tap water in various places in Hong Kong was much stronger, and fountains in some parks and downtown areas were also turned on.
This is also a shot in the arm for Hong Kong's economy. In the past, water shortage affected almost all industries. Real estates needed water, factories needed water, and power plants also needed water. Now, this problem has finally been completely solved.
After the Spring Festival, everyone goes to work as normal, including banks.
Guangdong Trust Development Bank also suffered a run on it very quickly. The reason was also because during the Spring Festival, many newspapers described the debt problems, funding problems, etc. of many banks. Even people setting up stalls in the street were passing the news on to each other. News that many banks have problems.
Therefore, on the first day after the Spring Festival, Guangdong Trust Bank was selected as the target for people to withdraw money;
However, regardless of whether the bank has problems or not, there is no bank in the world that can withstand a run on customers withdrawing money. The smaller the bank, the lower its affordability.
So within a few days, the funds in Guangdong Trust Bank's account dried up, and its boss immediately asked other banks for help. However, other banks were also afraid of their turn, so they naturally did not dare to save them, and were eventually forced to declare bankruptcy. As soon as the news came out, all major Chinese banks in Hong Kong immediately fell into a run frenzy, including Hang Seng Bank, Bank of East Asia, Far East Bank, Dao Heng Bank, Wing Lung Bank, etc., each of which was affected to varying degrees,
The British banks are much better. Whether it is HSBC or Standard Chartered, no one is running in front of the bank branches. There are even many people who have withdrawn money from the Chinese banks and then sent it to the British banks to deposit money. They are completely Watching the fire from the other side.
Inside Hang Seng Bank, He Shanheng's face was ashen, and a dozen people below were sitting with stern expressions. The entire space was very quiet, and even the sound of breathing was controlled.
"How much money is there in the bank account now?" He Shanheng asked, looking at a middle-aged woman.
The middle-aged woman replied: "He Sheng, there is currently 45 million Hong Kong dollars in the account, of which 26 million were originally intended to be loaned out, but the process has not been completed yet."
"I suggest not to go through the process. All unloaned money will be stopped." A senior executive said quickly: "Mingde Bank and Guangdong Trust Bank have gone bankrupt. We must leave sufficient funds to deal with any eventuality." "
"Qin Sheng, Mingde and Guangdong Trust have problems with their banks. In the past, they had very low risk control in terms of loans." A man said: "We at Hang Seng completely follow the operating standards of normal international banks. Yes, risks have been controlled, the scale is much larger, and the ability to resist risks is strong. Is it necessary to do this?
We have also signed contracts with many companies for these loans. If they are not paid in time, we will have to pay liquidated damages, and this will also seriously affect the business reputation of our bank. ”
The others did not speak. They all glanced at the man who spoke. This man was in charge of bank credit. The suspension of loan disbursement would have a devastating impact on his income commissions, business connections, etc.
But even if his own reasons are not taken into account, what he said is right. The consequences of such a large-scale default by a bank are very serious. Only two small banks have been run so far. Isn't it a bit of a fuss?
The person just now said: "What if there are not enough funds in the account and our bank is also run? Depositors don't care whether your operations are normal or not, they will only allow you to withdraw money. Once the money is gone, you can do whatever you want. Even if you are alive, you can’t stop the run.”
"I have a different opinion." Another person said: "If we default on a large scale, we will not only lose our business reputation and some customers, but what is more troublesome is that at this point in time, if we are sued for not lending, then It may cause a run, and the result will be the same.”
"It's different. Even if you give them some compensation, a few entrepreneurs can still make sense, but for thousands of depositors, the more you explain, the less they will believe it."
In the conference room, Hang Seng Bank executives were still arguing, each with their own opinions.
He Shanheng, who was sitting in the chairman's seat, frowned. In the current situation, he was really in a dilemma. Leaving funds to prepare would affect the business for one or even several years in the future. If he didn't retain funds, he didn't know what to do if he encountered a run. Can't cope with it.
"Yang Wendong asked me to keep more funds that day. Could it be that he was planning ahead and knew what would happen today?"
He Shanheng quickly remembered what Yang Wendong had said before. Although he said it casually, he didn't pay much attention to it at the time. But thinking about it today, it seemed like a reminder. But how could he know?
"Did he infer it based on the real estate market and the debt ratio of banks in Hong Kong?"
If you think about it this way, it is possible. No one in Hong Kong does not admire Yang Wendong's ability. From his perspective, it should not be difficult to calculate the risks of Hong Kong's banking industry, as long as he can be sure that there will be problems in the Hong Kong real estate market. Because land prices are so high If prices fall or even stop rising, bank bad debts will appear.
It's just a pity that he had a lot of funds in his hands at the beginning, but because his bank risk was very low, he didn't keep it. Instead, he followed normal business operations and loaned out a lot of it.
"He Sheng?" At this time, the assistant beside him reminded.
He Shanheng also recovered from his thoughts and said: "In this way, let's negotiate with our loan customers first. If they are willing to suspend their loans, we can provide appropriate compensation, or make a written promise to provide a loan with a lower interest rate in the next six months.
If you don't agree, then we can try to give their loan business to other banks. If it doesn't work, we can only get loans. I think if we operate this way, even if we still need loans, the total amount of funds will not be very large.
I know the next batch of loan customers, and they are considered our old customers. We have helped them in the past, so there should be no big problems. ”
"Okay, He Sheng." Many people nodded and said.
This method is indeed the most appropriate at present.
He Shanheng added: "In addition, in order to avoid uncontrollable situations, the loan department can appropriately contact some long-term partners with good relationships and ask them if they can repay the loan in advance. We can also compensate appropriately."
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After others heard this, they all agreed. Now we are sacrificing a little profit, but without losing our business reputation. If you and I are willing, we can recover some funds to avoid short-term risks.
He Sheng's move was indeed pretty good.
In the blink of an eye, another week has passed.
The banks in Hong Kong are going crazy because the runs are becoming more and more exaggerated; in 1961, it was only Liao Chong Hing Bank that was being run. They watched from the other side and even laughed behind their backs when Liao Chong Hing asked for help.
But today, they have to experience the despair that Liao Baoshan felt back then. In any branch, there are endless people queuing up to withdraw money. Each one is not very much, but when added up, one branch can withdraw millions of Hong Kong dollars in a day.
In mid-February, several smaller banks couldn't bear it any longer and immediately collapsed: they had no money.
I couldn't even stand up, so ordinary people in Hong Kong became even more panicked. They asked for leave one by one and had to withdraw money even if they didn't go to work
In Changxing Building, Yang Wendong also received a large number of messages from employees asking for leave. As a last resort, he could only agree: "Let them ask for leave. There is no way to stop them at this time. They can just adjust the leave in the future."
Wei Zetao said: "It is possible to adjust leave, but such unplanned large-scale leave will still affect our production capacity."
"There's nothing we can do about it. Can a few days' income from a job be worth half their lifetime savings?" Yang Wendong said: "We are in Hong Kong. When big events happen in Hong Kong, it will also affect us. We were short of money before. Isn’t it the same with water?”
Not to mention such trivial matters now, the impact will be greater in two years. This is one of the reasons why Yang Wendong began to gradually migrate production capacity as early as 1963. Not to mention making up for the losses at that time, at least there were production bases overseas. It will always be much better.
Wei Zetao said: "That's all it can do."
Yang Wendong then looked at Zheng Zhijie and asked: "Hang Seng Bank has also begun to experience runs, right? How is the situation?"
Regardless of whether Yang Wendong exists, this bank run is bound to happen, because the core essence is the Hong Kong government’s lack of control over banks. During the real estate bull market a few years ago, too many banks ignored risks in order to make money, thereby laying the foundation for It was foreshadowed that today there was a problem in the real estate market, and the bank was also in trouble.
What's more important is that behind today's incident, Yang Wendong felt that someone was adding fuel to the flames, but there was no evidence and everything was just speculation.
"Yes, various branches of Hang Seng Bank have also started to run, and there are a lot of people." Zheng Zhijie added: "He Shanheng is already raising money now."
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(End of chapter)