HONG KONG (AFP) — Hundreds of Hong Kong savers swarmed Bank of East Asia branches for a second day Thursday, but its share price bounced back after authorities insisted it was not overexposed to Wall Street's crisis.
Queues formed outside several branches across the southern Chinese territory before they opened with customers scrambling to empty their accounts after a text message rumour questioned the bank's stability.
The bank's management, the Hong Kong government and financial regulators dismissed the rumours, which had claimed BEA was heavily exposed to assets backed by failed US investment bank Lehman Brothers and troubled insurer AIG.
Chairman David Li flew back from New York overnight to deal with the crisis, and said he and other directors would be buying up shares to show their confidence in the bank's liquidity.
Hong Kong's richest tycoon Li Ka-shing also bought BEA shares, a spokesman for Li's flagship company Hutchison Whampoa said.
"He has supported BEA with his personal money," said the spokesman, who said he could not say how much Li had invested.
The moves seemed to reassure the market, as BEA shares jumped 5.2 percent in early trade, after falling 6.9 percent on Wednesday.
But many savers remained wary and queues were seen outside several branches before the bank opened at 9:00 am.
"I waited until 10 o'clock last night to try and get my money out, but could not get it, so I am back again to take it all out," said construction worker Tanka Rai.
Jose Varghese, a community organiser, decided to withdraw his savings after he walked past a branch in the Yau Ma Tei district and saw the queue of around 70 people.
"I was not intending to take out my cash and I am not worried about the bank, but it is better to be safe," he said.
Others poured scorn on the panic.
"I believe in the bank. These people are crazy," said Richard Wong, a manager at an electronics firm, as he walked past a queue.
"They just do not have any knowledge about it. I have a lot of money in this bank but I will not be taking it out. They are just lower class people who do not understand the situation."
Crowds began to gather outside BEA branches on Wednesday, after text messages flashed across the city warning the bank was unstable as it held a large number of assets linked to Lehman's and AIG.
The bank said the text messages were spreading "malicious rumours" and said its financial position was "sound and stable," but savers queued into the night to try to retrieve their funds.
In a statement, BEA said its exposure was 422.8 million Hong Kong dollars (54.2 million US) to Lehman's and 49.9 million dollars to AIG, out of consolidated assets of 396.6 billion Hong Kong dollars.
Both the Hong Kong Monetary Authority (HKMA), the city's de facto central bank, and Financial Secretary John Tsang said the city's banking system was safe and that BEA was in a strong position.
The HKMA injected 3.88 billion Hong Kong dollars into the banking system on Thursday as a result of "increased liquidity demand... amid heightened concern about credit and liquidity conditions," a spokeswoman told AFP.
BEA is one of the city's most established banks and chairman David Li is a member of one of Hong Kong's most powerful families, which has been prominent for five generations in business and politics.
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