Depositors withdrew more than 41 billion won from the Tomato 2 Savings Bank in South Korea yesterday, according to the WSJ.
The spike in withdrawals, which was more than 10x the norm, prompted two South Korean finance officials, Financial Services Commission Chairman Kim Seok-dong and Financial Supervisory Service Governor Kwon Hyouk-se, to assure the bank’s clients that their money was safe by each depositing 20 million won each with branches of Tomato 2 Savings Bank.
The reason for the spike in withdrawals is understandable, but totally wrong: Tomato Savings Bank, a sister bank of Tomato 2 Savings Bank that otherwise has nothing to do with it, was one of the 7 savings banks shut down on Sunday for bad performance.
The similarities in the bank names freaked people out so much that after Kim deposited his 20 million won with Tomato 2, he told a bunch of people waiting to withdraw their money outside the bank, according to the WSJ:
“Tomato Savings Bank and Tomato 2 Savings Bank are totally different….(The latter) has no problem. Its BIS ratio is 6.26%. I myself just put my money into this bank, so please don’t worry.”
In the U.S., the opposite is happening. Banks have too much money. It’s expensive to hold so much, and US banks don’t want it because interest rates are so low, they don’t make enough money off of deposits.
In the last three months, accounts at U.S. commercial banks have increased $429 billion, or 10%, almost double the increase for all of last year. And deposits are at record levels near $10 trillion, according to the LATimes.
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