The Li family-controlled Bank of East Asia, the largest independent local bank in Hong Kong, has strenuously denied reports that the bank is in trouble after thousands of people queued outside its branches yesterday to withdraw their savings.
The run on the bank was prompted by what chairman and CEO David Li Kwok-po said were “malicious rumours first disseminated via electronic devices late in the afternoon on 23 September.”
BEA reported the matter to the police and the Hong Kong Monetary Authority and issued a statement clarifying that the bank’s financial position is sound and stable. As of 30 June 2008, the total consolidated assets of BEA stood at $50.85 billion.
The business of the bank remains normal, and all BEA said all its branches would operate as usual today (Thursday).
However, shares in the bank fell sharply by up to 11.3% before rallying to close down 6.9%. In addition, BEA announced that its total outstanding exposures to Lehman Brothers and AIG were a relatively modest $53 million and $6 million, respectively.
Nevertheless, Li and the bank’s board advised investors to “exercise caution” when trading in shares of the bank.
This is the second time this year that the family has been in the news. In February Li paid an $8.1 million civil penalty to the US Securities and Exchange Commission to settle an insider trading case (see below).
Hong Kong family settles $24 million insider trading case.