Withdrawals force banks to increase interbank borrowing

A massive withdrawal of deposits in early June has put a major squeeze on some banks, forcing them to increase their borrowings in the interbank market to meet their obligations.

Depositors at China's four State-owned banks withdrew up to 140 billion yuan ($22.70 billion) in the first nine days of June. Meanwhile, lending by these banks increased a combined 217 billion yuan, according to a report in the Securities Daily.

Banking sources said that much of the money withdrawn was invested in high-yielding wealth management products, particularly currency funds targeting corporate and local government bonds.