Run on Hong Kong’s Bank of East Asia eases after stability pledge

HONG KONG, September 25, 2008 (AFP) – The run on Hong Kong’s Bank of East Asia subsided on Thursday, as banking authorities soothed savers’ concerns that Wall Street’s financial crisis had spread to the city.

Hundreds of customers queued for a second day across the city before branches opened as they scrambled to get their cash, after a rumour that it was overexposed to assets linked to Lehman Brothers and troubled insurer AIG.

But most queues had disappeared by the afternoon as the bank’s management, the Hong Kong government and financial regulators dismissed the rumours.

BEA chairman David Li flew back from New York overnight to deal with the crisis and said he and other directors would buy up shares to show their confidence in the bank.

Hong Kong’s richest tycoon Li Ka-shing also bought BEA shares with his personal money, a spokesman for Li’s flagship company Hutchison Whampoa said.

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.

HKMA also injected 3.88 billion Hong Kong dollars into the banking system on Thursday.

The move was