Chinese authorities promise payments after bank fraud protests turn violent

Beijing — Authorities in China’s Henan province said on Monday they will start paying back first on behalf of several rural banks funds of some clients that had been frozen, in a bid to ease anxiety among depositors that led to protests over the weekend.

Payments will be made in batches, with the first due on July 15, the local banking and insurance regulator and financial regulatory bureau of Henan province said in a joint statement.

On Sunday, about 1,000 people gathered outside the provincial branch of the Chinese central bank in Henan’s capital of Zhengzhou to demand action.

In April, a number of banks in Henan froze deposits raised from ordinary Chinese people, with Chinese media reporting that the frozen deposits could be worth up to $1.5bn. An investigation for possible fraud is under way.

Police say they have arrested some suspects and frozen funds in connection with the disappearance of the deposits, according to an official notice posted late on Sunday.

Henan police said the suspects were able to effectively control a number of the province’s banks via a group company, according to the notice posted on an official WeChat account.

The criminal cohort used third-party financial product platforms and a firm they set up themselves to gather deposits and sell other financial products. They then made fictitious loans as a way to illegally transfer the funds, the notice said.

Payments will be made to some customers of Yuzhou Xinminsheng Rural Bank, Shangcai Huimin County Bank, Zhecheng Huanghuai Community Bank and Kaifeng New Oriental Rural Bank starting on July 15 on behalf of the lenders, the Henan financial authorities said in their statement.

Reuters