A century-old wealthy family that rose from Shanghai

Chapter 455 British and Chinese Capital

Meanwhile, starting from February 4th, the number of people going to Hang Seng's head office and branches to withdraw money increased dramatically. Hang Seng's leaders mobilized urgently, raising cash to meet the withdrawals while sending staff to persuade depositors to postpone their withdrawals. Ho Sin-hang and other Hang Seng leaders, along with staff, went to various branches to explain, guarantee, and persuade depositors, but they were unable to alleviate the depositors' fears.

Perhaps it was the depositors' vivid memory of Hang Seng's origins as a bank; perhaps it was the depositors' distrust of Chinese-owned banks as a whole, but the number of depositors rushing to withdraw their funds continued to rise. Hang Seng's total deposits amounted to HK$6 million, and the chaotic situation was even more terrible than the run on Liu Chong Hing Bank years ago. Hang Seng exposed a serious shortage of liquidity, leaving its leaders at a loss.

On February 5, Guangdong Trust Commercial Bank, a long-established Chinese-owned bank founded in 1931, ran out of cash due to a bank run.

The collapse of this long-established bank with 26 branches exacerbated depositors' panic, triggering another wave of bank runs. Chinese-owned banks faced their biggest credibility crisis in history, while foreign banks like HSBC and Standard Chartered remained calm and unperturbed.

"What's the situation outside?" Chen Guangliang asked seriously.

Ye Ximing's expression was grave as he said, "Our Ping An Bank is also experiencing sporadic withdrawals, but according to outside reports, the situation is much better than other banks. However, the run on other Chinese-owned banks is fierce, and we have to be extremely vigilant. If the entire Chinese-owned banking system collapses, we may not be able to escape unscathed. Fortunately, our major clients are quite familiar with our strength, and at least 2 million in deposits have pledged not to participate in the run. In that case, we will definitely be fine."

Chen Guangliang immediately said, "No, it's not just about running out of cash that's a problem. Even if we experience a bank run, it will have a huge impact on our reputation. With Chinese-owned banks facing difficulties, Ping An Bank must uphold its reputation. I have already contacted Chase Bank, Citibank, and several Japanese banks, using some shipping and real estate assets as collateral. They will offer us dollar loan commitments, which are available anytime!"

Ye Ximing thought for a moment and said, "It would be good to have such a promise, but we definitely won't need it."

"No, it might come in handy. I have a feeling that this run on withdrawals is being manipulated by someone, and the target is our Chinese-owned banks."

Ye Ximing was not surprised, but said, "Indeed. It seems like British capital is manipulating things."

"Knock knock. Mr. Chen, Mr. Ho Sin Heng from Hang Seng Bank would like to see you!"

"Please come in, Manager Ye. Please accompany him to meet them; after all, you are the general manager."

"it is good"

Shortly after, Hang Seng Bank CEO Ho Sin-hang walked in. He looked very haggard, which clearly indicated the severity of the bank run at Hang Seng Bank.

On the contrary, Bank of East Asia has maintained a rigorous approach since a bank run in the 1930s. But precisely because of this, Bank of East Asia was later surpassed by Hang Seng Bank, and its current deposits are probably only around 500 million.

“Sir Chen, Manager Ye, the reason I’ve come to see you today is to ask Ping An Bank, considering that we are both Chinese-owned banks, to lend some funds to Hang Seng Bank,” He Shanheng said wearily.

Both are Chinese-owned banks?

Chen Guangliang did not agree with this, viewing his peers as enemies. However, as a leader of the Hong Kong Chinese community, he naturally could not say such a thing.

Speaking of which, Hang Seng Bank has developed very rapidly, even outpacing Ping An Bank in growth rate.

Ping An Bank was once many times the size of Hang Seng Bank, but now it is only twice its size. There are two main reasons for this: First, Ping An Bank has always been a private bank with a single shareholder, namely the Chen family. Although Chen Guangliang has always touted that the bank operates in the style of a Western bank, outsiders will not completely believe it. Second, the founder of Hang Seng Bank was from Guangdong, and Hong Kong is a society dominated by Cantonese people, which gives it an advantage.

For both reasons, Ping An Bank's growth rate can only be described as stable, but not as high-speed.

Ye Ximing immediately said, "Mr. He, the Chinese-funded banks are one family, but our Ping An Bank also has different levels of withdrawals. In some ways, our Ping An Bank may be in more danger because we are the leading Chinese-funded bank. So, the matter of interbank lending is probably not feasible!"

He Shanheng quickly said, "With Mr. Chen being a director of HSBC and maintaining connections with overseas banks, plus Ping An Bank having a very good reputation in Hong Kong, there will definitely be no problem."

Chen Guangliang then said, "I dare not gamble. But if there is a profit involved, I can take a gamble."

He Shanheng was taken aback and tentatively asked, "Mr. Chen, do you intend to take over Hang Seng Bank?"

Only in this way can it be called a so-called benefit.

Chen Guangliang laughed and said, "Wouldn't that be taking advantage of their misfortune? So it's not about swallowing them up, but about investing! Of course, you can also choose to side with HSBC, but I believe they want to swallow them up. Alright, you still have the right to choose until the very last moment."

He Shanheng left in a daze, still thinking about Chen Guangliang's words.

Inside the office, Ye Ximing watched He Shanheng's retreating figure and whispered, "Are you really going to invest in Hang Seng? Their bad debt ratio is probably not low."

Chen Guangliang looked out the window and said, "Chinese-owned banks can't collapse. But we can't let ourselves suffer losses either. Hang Seng's branches and Cantonese customers are exactly what we need."

He drew a circle on the table with his fingertip. "I will go to banks in the United States and Japan and ask them to have sufficient foreign currency ready at any time."

Ye Ximing felt a chill run down his spine, realizing that his boss had made two preparations—to stabilize the foundation of the Chinese-funded bank and to take the opportunity to expand Ping An's empire.

HSBC and Standard Chartered were surprised and shocked to learn that Ping An Bank had escaped unscathed; they had not expected Chen Guangliang to have such a large influence in Hong Kong.

The recent bank run at Chinese-owned banks has exhibited a domino effect, making it virtually impossible for any Chinese-owned bank to avoid it.

Logically, Ping An Bank, the largest Chinese-owned bank, should have been in a very serious situation. However, Ping An Bank is operating normally, and apart from a small number of depositors withdrawing their deposits, there has been no run on the bank.

In the conference room at HSBC headquarters, Sanders tossed Ping An Bank's repayment report onto the table, his ivory-handled cane thumping dully on the carpet. "Their withdrawals are actually decreasing?"

He stared at the data in disbelief. Outside the glass curtain wall, the neon lights of the Ping An Bank branch were still bright, creating a stark contrast with the long queue outside the Hang Seng Bank.

Standard Chartered Bank tycoon McCallier stubbed out his cigar sharply, his amber eyes blazing with anger. He said fiercely, "Why don't we spread another rumor that the Chen Guangliang family has decided to expand overseas and withdraw from Hong Kong?"

Sanders slowly shook his head, his fingertips tracing the Freemason ring, and said, "I'm afraid it won't be of much use! The Chan Group's industrial chain is already tied to Hong Kong. Cheung Kong's properties, Cheung Kong Industrial's factories, Global Shipping's cargo ships... none of these can be moved." He looked at the Hong Kong map on the wall, where the red line of the Hung Hom Tunnel resembled a blood vessel, connecting the Chan Group's industries into a network.

McGarry's voice carried a desperate resolve: "Even if it doesn't work, we have to try. Let's start spreading the word among our informants in Yau Ma Tei that Chen Wenjin is transferring funds from Amazon Shopping Center in the United States."

At this moment, at the Hang Seng Bank headquarters, Ho Sin-hang and others were extremely anxious. Li Kwok-wai pushed open the door and entered, his suit sleeves dusty: "HSBC said they can provide unlimited funds, but they want 51% of the shares, priced at HK$5000 million."

“Just as I expected.” He Shanheng slammed his wine glass down on the table, the wine splashing onto the report and spreading into a dark stain. “Sir Chen’s prediction was spot on. If HSBC helps us, it will definitely be to gain controlling interest.”

General Manager He Tian hurried in, the clasp on his briefcase still jingling: "Ping An Bank has replied. 49% equity, also 5000 million, plus a loan of 3 to 4 million Hong Kong dollars, and no interference in management."

Li Guowei, who was the last to join Hang Seng, pushed up his glasses: "It's just that Ping An Bank may not have the same influence as HSBC. After all, HSBC has too deep a foundation in London and Hong Kong."

He Shanheng rubbed his temples. The clock on his desk pointed to 2 a.m.: "So, even if we talk to both sides, it might not be completed within 12 hours, otherwise we definitely won't be able to hold on. Guowei, you continue to talk to HSBC, and Atian, you go talk to Ping An Bank, as soon as possible!"

"Okay." The two said in unison, the sound of their leather shoes hitting the ground particularly jarring in the quiet corridor.

The following morning, in a tea restaurant in Yau Ma Tei, taxi drivers were discussing the newspapers. The front page headline read in bold, "Chen Family Plans to Relocate Registration to the United States," accompanied by a photo of Chen Wenjin at a ribbon-cutting ceremony at a Los Angeles shopping mall. Outside the headquarters of Ping An Bank, a few depositors began to gather, some holding up newspapers and loudly questioning him.

When Chen Guangliang received the news, he was in the tape recorder workshop of Cheung Kong Industrial. He put down the prototype in his hand and smiled at Chen Wenkai beside him, saying, "The British banks' methods are still so clumsy." He turned to his secretary and instructed, "Prepare the car to go to the Oriental Daily News office; I want to give an interview."

The newspaper's printing presses were still humming. Chen Guangliang sat in front of the camera, the backdrop behind him bearing the logos of the Chen family's four major conglomerates. In an interview with his family's controlled newspaper, *Oriental Daily News*, he stated, "The Chen family's business empire in Hong Kong is intertwined with Hong Kong's fate; it's impossible for us to withdraw, much less relocate overseas. Cheung Kong Industrial Group employs over 30,000 workers in Hong Kong—how could they possibly withdraw? Cheung Kong Holdings is listed in Hong Kong and primarily invests there—how could they possibly withdraw?"

In the evening newspapers, Chen Guangliang's photo occupied the front page, alongside a map of Cheung Kong's property developments, a list of Cheung Kong Industries' factories, and the size of Global Shipping's fleet. Those densely packed names served as a declaration, gradually silencing the whispers in the streets. Only then did Hong Kong people truly grasp the power of the Chen family's enterprises—Cheung Kong Holdings, Cheung Kong Industries, Global Shipping, and Ping An Financial Group—and the credibility of Ping An Bank was naturally guaranteed.

Inside the Hang Seng Bank meeting room, Ho Sin-hang stared at the two agreements in deep thought. Ho Tin highlighted the terms of Ping An Bank: "49% equity stake, management rights to us, 2 million in loans to be credited immediately, the remaining 1 million to be credited later, and a joint statement to advance and retreat together."

Li Guowei's pen paused on the HSBC agreement: "HSBC promised to help us access London's financial network, but they want a majority of board seats."

He Tian shook his head: "Sir Chen didn't want to annex us; you could say their terms were more favorable. What's the use of developing well if it doesn't belong to us?"

Looking out the window, He Shanheng said, "It would be great if Ping An Bank only needed 35% of its shares. 49% is still a bit risky."

“I’m afraid they won’t agree,” He Tian sighed. “However, we still hold 51% of the shares after all.”

The final vote ended in the early hours of the morning, with everyone voting in favor of Ping An Bank.

When Ho Sin-hang signed the agreement, his pen trembled slightly—this was not only the fate of Hang Seng Bank, but also the last stand of Chinese banks against British capital.

HSBC was furious when it heard that Hang Seng Bank had switched sides to Ping An Bank, but there was nothing it could do.

When headquarters received the message, Sanders was signing a loan agreement with Singapore. He threw his pen on the table and slammed his ivory cane heavily on the floor: "A bunch of stupid Chinese! Do they think they can rest easy just by clinging to the Chen family's coattails?"

When McGarry arrived, his face was even uglier than a cigar: "Our rumors have completely failed. The circulation of the Oriental Daily has tripled today."

On February 8, HSBC issued a statement saying that it would discuss assistance with any bank experiencing pressure from depositors' withdrawals and whose financial situation warranted financial support. This belated statement, like a weak punch landing on empty air, came as a loss.

On February 9, in response to the surging bank runs, the Hong Kong government announced a daily maximum cash withdrawal limit of HK$100 per account and urgently airlifted pounds sterling from the UK to circulate in the market at a rate of 1 pound to 16 Hong Kong dollars to alleviate the shortage of banknotes. Long queues appeared outside the HSBC branch in Causeway Bay for the first time to exchange for pounds sterling.

On February 10, Governor David Trench delivered a speech, stating that the Hong Kong government had ample financial resources, but was only temporarily short of banknotes. However, this situation would soon be alleviated. "Now the major banks are working together to cope with the situation, and the Hong Kong government will support them. Therefore, I urge all citizens to cooperate with the banks and rely on your assistance to overcome the current unnecessary difficulties."

As the bank run gradually subsided, Chen Guangliang was standing on the observation deck of the Hung Hom Tunnel. Ye Ximing handed him a report: "Hang Seng Bank's deposits have begun to flow back in, and Ping An Bank's new account openings have also begun to increase."

In the distance, on Victoria Harbour, a cargo ship belonging to the Global Group was slowly entering the port, the containers on the deck bearing the logo of Yangtze River Industries. Chen Guangliang looked at that bustling sea and suddenly recalled the muddy streets he had traversed pulling a rickshaw when he first arrived in Shanghai in 1927.

This time, Chan Kwong-leung's intervention to save Hang Seng Bank marks the first time he has truly shown his fangs in Hong Kong.

Of course, to outsiders, the clash between British and Chinese capital would go unnoticed.

Ping An Bank's announcement of its investment in Hang Seng Bank, forming an "alliance" between the two banks, caused a huge uproar in Hong Kong, but the situation was quickly stabilized.

Anyone with a discerning eye can see that the biggest beneficiary of this wave of bank runs is no longer HSBC and Standard Chartered, but rather the leading Chinese-owned bank – Ping An Bank.

This banking crisis was far more severe than the bank run that occurred before 1961 under Liu Chong Hing. It had a wide-ranging impact, causing two banks to collapse, Hang Seng Bank to be acquired, and leaving almost all small and medium-sized banks in dire straits, either on the verge of bankruptcy or severely damaged.

HSBC and Standard Chartered were the big winners in this crisis, maintaining their dominant positions and even acting as white knights—funding and rescuing many banks on the verge of bankruptcy with the coordination of the Hong Kong government. But they are no longer the biggest winners!

After Ping An Bank acquired a 49% stake in Hang Seng Bank, it only sent three directors to the bank. The chairman remains Hang Seng Bank veteran Ho Sin Heng, general manager Ho Tien, and deputy general manager Li Guowei.

The news that Ping An Bank only acquired 49% of the shares has sparked much discussion in Hong Kong's banking and business sectors.

"Isn't Ping An Bank taking advantage of our vulnerability?"

"That's not right! I heard that HSBC wanted 51% of the shares at the time, which would have made Hang Seng Bank completely align with British capital; and Ping An Bank wasn't without its problems either, it still chose to fund Hang Seng Bank, only wanting 49% of the shares, clearly still handing over controlling stake to the Hang Seng Bank team."

"Yes, it's better to side with HSBC than to side with Ping An Bank. Chinese capital is still Chinese capital. The fact that none of the three major Chinese banks have been affected this time means that Chinese banks have preserved their strength."

"Um"

In the days that followed, due to the huge credit crisis faced by small and medium-sized Chinese-owned banks, a large number of depositors withdrew their funds and deposited them in HSBC, Standard Chartered, Ping An, Hang Seng, and Bank of East Asia.

Hong Kong's banking sector is undergoing a reshuffle, with large banks becoming even larger and small and medium-sized banks facing increasing operational difficulties. This bank run has been ongoing for a long time, and sporadic occurrences continue.

(End of this chapter)