October 30, 2019 / 5:12 AM / a month ago

CORRECTED-UPDATE 1-China police detain woman for spreading rumours on rural bank's bankruptcy

(Corrects gender of bank’s main shareholder in paragraph 8)

BEIJING, Oct 30 (Reuters) - Police in China’s central Henan province said on Wednesday that they had detained a woman for spreading “false information” about a rural bank’s imminent bankruptcy, renewing concerns about the health of the country’s smaller lenders.

The woman, 29, will be detained for five days for falsifying facts to disrupt public order, police in Yichuan county said in a post on their official WeChat account.

The police did not identify the bank.

Yichuan Rural Commercial Bank, which has 33 branches in the county, said in a notice on its WeChat account on Tuesday that its branches had a high volume of over-the-counter requests and urged people not to “believe in rumours and take out deposits blindly”.

Repeated calls to Yichuan bank and its branches went unanswered on Wednesday.

In its notice, the bank did not specify the nature of its customers’ requests, but assured that it had sufficient assets, good business operation and management, and that the interest of all depositors was protected by law.

Earlier this year, a rare government seizure of then little-known Baoshang Bank and the following state rescues of Jinzhou Bank and Hengfeng Bank revived concerns about the true health of hundreds of small lenders as China’s economic growth slowed to a near 30-year low.

Set up in February 2009, Yichuan bank has 116 shareholders and is controlled by businessman Kang Fengli, who holds a 10.86% stake, according to the data from the National Enterprise Credit Information Publicity System.

By end-June, the total assets of Yichuan stood at 62.65 billion yuan ($8.87 billion), and its tier-1 capital ratio was at 9.18%, according to its first-half earnings report.

The bank’s bad-loan ratio was at 2.95% at end-2018, higher than the industry average of around 2%, according to a credit report of China Chengxin International Credit Rating Co (CCXI). (Reporting by Cheng Leng and Ryan Woo; Editing by Shri Navaratnam & Kim Coghill)

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