Fears of bank runs have escalated with the news that Russian lender ‘My Bank’ has banned all cash withdrawals until next week.
“Bloomberg reports that ‘My Bank’ – one of Russia’s top 200 lenders by assets – has introduced a complete ban on cash withdrawals until next week. While the Ruble has been losing ground rapidly recently, we suspect few have been expecting bank runs in Russia. Russia sovereign CDS had recently weakened to 4-month wides at 192bps,” reports Zero Hedge.
The source of the story is a person working inside the ‘My Bank’ call center, although officials for the bank have refused to comment.
On Saturday it emerged that HSBC was restricting large cash withdrawals for UK customers from £5000 upwards, forcing them to provide documentation of what they plan to spend the money on, a form of capital control that more and more banks are beginning to adopt.
This was followed by the story, which subsequently turned out to be false but caused market jitters nonetheless, that China’s commercial banks had been instructed to suspend cash transfers.
An IT glitch that prevented thousands of Lloyds Banking Group customers from withdrawing cash at ATMs in the UK also contributed to the concerns.
As we reported back in November, Chase Bank also recently imposed restrictions which prevent its customers from conducting over $50,000 in cash activity per month, as well as banning business customers from sending international wire transfers. Financial expert Gerald Celente said the news was a sign that Americans should prepare for a bank holiday.
Questions were already being asked of Chase after an incident last year when customers across the country attempted to withdraw cash from ATMs only to see that their account balance had been reduced to zero. The problem, which Chase attributed to a technical glitch, lasted for hours before it was fixed, prompting panic from some customers.
In November it was also reported that two of the biggest banks in America were stuffing their ATMs with 20-30 per cent more cash than usual in order to head off a potential bank run if the US defaults on its debt.