Heavy Runs on Citi in Hong Kong
Citicorp branches in Hong Kong experienced heavy withdrawals for the second consecutive day, amid depositor concerns about the company's health.
Citicorp's senior officer in Hong Kong confirmed that several branches experienced a run, but they said the withdrawals amounted to less than 1% of the billions of dollars in deposits the company holds in the British colony.
The officer, Steven Baker, was quoted in news agency reports saying that several Citicorp branches in Hong Kong extended their hours to accommodate lines of depositors anxious to take out their money.
Dingell Set Ball Rolling
Concerns about Citicorp operations in Hong Kong were sparked by remarks made last week by Rep. John Dingell at a subcommittee hearing, that Citicorp was "technically insolvent." The reports heightened widespread depositor nervousness stemming from last month's closure of Bank of Credit and Commerce International's Hong Kong operations.
Citicorp has denied Rep. Dingell's comments, saying they were "irresponsible and untrue." Hong Kong's secretary for monetary affairs, David Nendick, described reports questioning Citicorp's health as "totally without foundation."
Support for Citicorp
In a statement Thursday, Mr. Nendick added that "those spreading rumors are irresponsible and are to be condemned."
John Gray, vice chairman of Hong Kong & Shanghai Banking Corp., also came out in support of Citicorp.
Hong Kong & Shanghai, which serves as Hong Kong's central bank, assisted Citicorp Thursday with large cash infusions Thursday, according to agency reports.
"It's kind of a hair-trigger thing over there," said Bert Ely, a banking consultant based in Alexandria, Va.
Bad News Travels Fast
"Any time bad news comes out, they react."
The Hong Kong run was the second this week in which nervous depositors flocked to Citicorp branches overseas because of Rep. Dingell's remarks.
On Monday, the company's-branches in Pakistan were flooded with inquiries from depositors after local newspapers carried an incorrect story saying that Citicorp was bankrupt.
A spokesman for L. William Seidman of the Federal Deposit Insurance Corp. said Thursday that the chairman stands behind a statement made last week that Citicorp is solvent.