Hong Kong’s BEA Denies Rumors as Depositors Flee

Hundreds of customers descended on branches of Hong Kong's Bank of East Asia on Wednesday to demand their deposits back after the bank was hit by unconfirmed rumors questioning its stability.

As customers lined up outside its offices across the territory, the mid-sized lender insisted that "malicious" rumors spread by "electronic devices" on Tuesday had no basis in fact.

"The Bank of East Asia is not suffering from financial difficulties. We have enough cash to handle the needs of depositors," Deputy Chief Executive Joseph Pang told reporters at his company's headquarters Wednesday afternoon.

He declined to say how much customers had withdrawn, but said it was not a large amount and no major clients had pulled their money.

The bank said its capital ratio was well above international standards.

The rumors apparently emerged after Moody's Investors Service changed its outlook on BEA's credit rating from stable to negative on Friday, citing a recent insider trading case that exposed "lackluster internal controls" at the bank.

Last week, the bank revealed a trading loss of HK$93 million (nearly $12 million) it says was incurred by a rogue equity derivatives trader who "manipulated" valuations to hide losses.

The discovery forced the bank to revise down its earnings for the first half of the year.

The territory's de facto central bank, the Hong Kong Monetary Authority, dismissed the rumors as "unfounded" and said the banking system as a whole was "safe and sound."