I'm in the county town, and you say I'm a big shot?

Chapter 598 Reclaiming Some of the Power from Branch Managers
Interbank business is a banking term that refers to comprehensive financial business centered on capital financing between commercial banks and other financial institutions, including various types such as interbank lending, interbank deposits, and interbank payments.

This business, by optimizing capital allocation and improving capital utilization efficiency, has become an important tool for banks to adjust their asset and liability structure and expand revenue.

Jinghai Bank is no exception.

"You should ask President Gao, who is in charge of the business, for specifics," Chen Danlu replied, then looked at Gao Pan.

Gao Pan immediately replied: "There are a total of 5 transactions. Among them, there are 3 interbank loans, which last for 7 days and involve 1.2 million yuan, and 2 interbank deposits, which involve 2.1 million yuan. These are 6-month fixed deposits. I will give you the account details for all of them.

Gao Pan turned and went out, and a few minutes later he picked up a document.

"This is a detailed list of all interbank business transactions of the Pudong branch."

Fang Qingye took the document and carefully reviewed it. It turned out that not only Changxin Bank, but also Pudong Development Bank, Industrial Bank, and Shanghai Rural Commercial Bank were basically borrowing funds from the Pudong branch or the branch's interbank deposits with their banks.

This includes interbank business with Changxin Bank, and the data is exactly the same as what Gao Pan said.

"Not bad, President Gao, you remember all the numbers so clearly in your head," Fang Qingye said with a smile, then handed the documents back to him.

"No, not really. When I heard about the Changxin Bank incident today, I quickly checked our bank's business dealings with them, and everything was normal," Gao Pan explained with a smile.

Fang Qingye nodded approvingly.

"I'm here today mainly to inquire about our business dealings with Changxin," Fang Qingye said. "It's good that everything is normal."

Upon hearing this, the three bank presidents breathed a sigh of relief. The fact that the top bank president came to investigate without prior notice meant that the investigation was targeted, and it was good that no problems were found.

However, Fang Qingye's next words surprised the three of them:
"Once the five interbank loans are recovered on schedule, we will cease all interbank lending! This applies not only to Changxin Bank! From this moment forward, we must expedite the recovery of all funds lent out by our bank! Starting today, Jinghai Bank will, in principle, suspend all interbank business. Any branch wishing to conduct any interbank business must obtain my review and approval!"

"Huh?" All three of them were stunned.

After a while, Gao Pan couldn't help but ask, "Fang Xing, why? As you know, the Shanghai Interbank Offered Rate (SHIBOR), which is the benchmark interest rate for interbank lending in China, has recently surged several times. The overnight lending rate even rose to a rare high of 13.44%! Keeping deposits in the bank account is a liability; you only make a profit by lending them out."

It's no wonder Gao Pan said that; the deposits at the Pudong branch have grown too fast.

Since the branch was established, Fang Qingye immediately ordered the deposits of his companies to be gradually transferred to the Pudong branch's account. In particular, the vast majority of the 80 billion yuan raised by Ele.me was deposited into the Pudong branch's account.

There's also the P2F wealth management product "Wenyingbao" launched by Jinghai Bank, which requires opening an account at the Pudong branch and having all funds deposited there.

This also includes deposits normally attracted by branch employees such as Chen Danlu. Last month's monthly report showed that the Pudong branch's deposit balance reached 1021 billion yuan, which actually accounted for half of the total deposit balance of Jinghai Bank this month!
Deposits must be lent out to generate profits; otherwise, they will remain idle in the account, which is a liability for the bank because the bank has to pay interest to depositors!
Besides normal loans, interbank business has become a key profit driver for the Pudong branch, especially with the recent surge in interbank lending rates, which has naturally made the Pudong branch, as the lender, very rich.

This was supposed to be a highlight of the Pudong branch's business this year, but it was halted by Fang Qingye's single sentence, leaving Gao Pan, who was in charge of the business, quite anxious.

Fang Qingye was somewhat displeased by Gao Pan's slightly questioning tone, but she didn't lose her temper. She simply replied, "Since the interbank lending rate has soared, what does that mean? It means that banks are short of money and the market is facing the risk of insufficient liquidity! So our Jinghai Bank must take precautions."

“I know, but Jinghai Bank, especially the Pudong branch, doesn’t lack money,” Gao Pan argued. “I didn’t say we’d completely stop interbank business, but all contracts and agreements must be signed and approved by me!” Fang Qingye said coldly.

What the hell!

It turns out they wanted to take back the power from the branch manager!
Gao Pan wanted to argue further, but Chen Danlu stopped him with a look.

"This matter doesn't need discussion; I'll announce it at the bank president's meeting this afternoon," Fang Qingye said crisply, glancing at Chen Danlu.

"Chen Xing, you must now thoroughly investigate all existing interbank business to determine if any projects involve high-risk activities such as 'short-term debt for long-term investment' or 'side agreements,' especially those similar to Changxin Bank's practice of packaging mortgage projects as trust products and selling them to us! Report the findings to headquarters!"

After Fang Qingye finished speaking, Gao Pan's expression changed, but he didn't say anything.

The so-called "short-term debt for long-term investment" refers to some projects, especially some real estate development projects, where the development time of these real estate projects may be as long as two or three years, while the funds from the interbank department are theoretically borrowed within one year.

How to do?
Use the speed of financing to make up for the financing period.

This requires investors to have a clear understanding and plan for the investment cycle and debt cycle, and it is a high-risk, high-profit project.

"Side agreement" refers to a situation where a joint-stock commercial bank and a small or medium-sized bank purchasing trust beneficiary rights in interbank assets sign a repurchase agreement, a spot buyout plus a forward repurchase agreement (commonly known as "double buyout"), or make other guarantee commitments, with the joint-stock bank providing a non-public guarantee for the relevant interbank assets.

Because this guarantee is not public, it is likened to an "agreement in a drawer," and therefore does not create "additional money supply" by consuming risk capital.

These are all tricks played within the financial industry, used to circumvent regulations and obtain high profits, which naturally also means high risks.

Upon hearing Fang Qingye's words, Chen Danlu immediately replied, "Okay, I will organize personnel to investigate right away."

"Okay, I'll head back now." Fang Qingye stood up and then said to Chen Danlu, "Don't forget the meeting at 2 PM!"

After saying that, he turned and walked out, and the three bank managers hurriedly saw him off.

Downstairs, they saw Fang Qingye get into her Mercedes and drive away slowly before the three of them went back upstairs.

"Chen Xing, isn't Fang Xing overreacting? Is he making a mountain out of a molehill?" Lou Gaopan couldn't help but complain from the side.

"It's best to be cautious. I think this cash crunch will not only affect the interbank market, but may also impact the entire financial industry, including funds, securities firms, and trusts. Having cash on hand will give us peace of mind," Chen Danlu replied, adding:
"Alright, let's not discuss this anymore. Gao, immediately notify the heads and deputy heads of the Digital Finance Department, Credit Department, and Interbank Department, as well as the heads and deputy heads of the branch offices, to come to the conference room for a meeting to implement President Fang's instructions!"

"Ok."

The Pudong branch immediately sprang into action.

Fang Qingye was still on his way back to Nanxin when his conversation at the Pudong branch reached the headquarters of Jinghai Bank.

(End of this chapter)