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Chinese banks gain foreign bank deposits

By Wang Zhenghua (chinadaily.com.cn)
Updated: 2008-12-10 13:43

Foreign banks in Shanghai are suffering liquidity shortage as their clients, fearing the financial crisis might bring more overseas lenders into the storm, are relocating their deposits to Chinese banks as they have less exposure to the turmoil.

In a report released on Tuesday, China's central bank's Shanghai headquarters said that in November the number of deposits at the city's Chinese banks continued to rise while their foreign counterparts witnessed a decrease.

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Corporate deposits at Chinese banks rose by 20.3 billion yuan ($2.97 billion), with 6 billion yuan from companies' fixed deposits. In comparison, the corporate deposits at Shanghai's foreign banks dropped by 3.86 billion yuan, of which 3.64 billion were from corporate time deposits.

"Since panicked depositors lined outside the Bank of East Asia's branches in Hong Kong to get back their deposits in late September, many clients, including Chinese companies have transferred their money to domestic banks," the 21st Century Business Herald cited an unidentified retail banking official at a foreign locally incorporated bank as saying Wednesday.

"It's a big strike to us, especially after the third quarter. Now we don't have funds to extend lending," the official said.

Wei Jiafu, president of China Cosco Holdings Co, the world's largest operator of iron-ore and coal ships, said in November that amid the financial crisis the company took measures that included moving their loans from overseas lenders to the Bank of China.

"Now Chinese banks appear to be much safer. In recent months many overseas-listed enterprises have moved their deposits to our bank," the paper quoted an official with a large-sized Chinese bank as saying.