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.[Hong Kong Company Formation, Incorporation, Business Registration]

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Banking sources said that much of the money withdrawn was invested in high-yielding wealth management products, particularly currency funds targeting corporate and local government bonds.

The squeeze came at a time when banks are required to complete their mid-year filings to watchdogs including the People's Bank of China and the China Banking Regulatory Commission. Some banks are busy scrambling for money to shore up their books.

The surge in demand has also caused wide swings in short-term rates in the otherwise staid interbank market.[Hong Kong Company Formation|Hong Kong Company Registration]

The Shanghai Interbank Offered Rate, or Shibor, a benchmark of funding costs calculated on the platform of the National Interbank Funding Center in Shanghai, surged on Wednesday.

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Banking sources said that much of the money withdrawn was invested in high-yielding wealth management products, particularly currency funds targeting corporate and local government bonds.

The squeeze came at a time when banks are required to complete their mid-year filings to watchdogs including the People's Bank of China and the China Banking Regulatory Commission. Some banks are busy scrambling for money to shore up their books.

The surge in demand has also caused wide swings in short-term rates in the otherwise staid interbank market.[Hong Kong Company Registration Guide]

The Shanghai Interbank Offered Rate, or Shibor, a benchmark of funding costs calculated on the platform of the National Interbank Funding Center in Shanghai, surged on Wednesday.