Chapter 434: Capital Injection into Hang Seng Bank
Yang Wendong nodded slowly. "Looks like he didn't take my advice back then. But that's understandable. Let's just see how long he can hold out."
Whether he helped or not, Yang Wendong wouldn't be the one to offer first. No matter how sincere he was, anyone on the receiving end would instinctively be suspicious—thinking he had ulterior motives. That was simply how business worked, and how diplomacy between nations worked too.
Zheng Zhijie added, "Mr. Yang, you're also a shareholder. I reckon if they really run out of money, they'll come to you."
Wei Zetao commented, "Would it really go that far? Hang Seng is a much larger bank than Liu Chong Hing was back in the day. Even if there's a run, they might be able to weather it. Surely the Hong Kong government would step in and help—otherwise the economic impact on the city would be devastating."
Today, Hang Seng Bank's scale was at least three times that of Liu Chong Hing when it collapsed. Moreover, Liu Chong Hing's loans were largely internal—lent to related parties. Hang Seng, by contrast, had its loans spread across a wide array of external clients. If it went down, the domino effect would be far greater.
Yang Wendong replied, "The Hong Kong government isn't in the business of charity. Precisely because Hang Seng is big and has valuable assets, tell me—who wouldn't be tempted by that?"
Wei Zetao nodded. "True. Now it all depends on whether Hang Seng can calm the panic."
"It'll be tough. When fear kicks in, depositors panic," Yang Wendong said, shaking his head. "Everyone would rather give up some interest than risk their principal."
Zheng Zhijie added, "Exactly. Liu Chong Hing collapsed in just over ten days. They didn't even have time to liquidate assets. Banks look glamorous from the outside, but the risk is massive."
"Right. A company like ours, even if we fail, we won't go under overnight. We'd have time to adjust. But for banks and financial institutions, one slip and it's an avalanche," Yang Wendong said with a slight smile. "Let's see what kind of moves He Shanheng has left."
The banking sector often seemed deceptively simple—taking money from depositors and lending it to borrowers. Aside from rare exceptions, banks usually held the upper hand, with borrowers vying for their favor. And banks could mobilize capital far beyond their actual size.
But the risk was always the same—once even a tiny spark of fear ignited a bank run, it could destroy everything. Not only would fortunes vanish, but people might end up behind bars.
That's why, despite knowing the profitability of the sector, Yang Wendong had steered clear of banking early on. One, his "golden finger" (future knowledge) wasn't particularly useful here. Two, a bank could easily become the group's Achilles' heel. And three, he still needed the cooperation of other major banks for real estate, shipping, and manufacturing—if he owned a bank, those partnerships would get complicated.
So early entry into banking made little sense. Once he was stronger, with political backing behind him, then he could revisit the idea.
In the following days, all Hang Seng Bank branches were swarmed by depositors. Everyone was anxious to withdraw their savings.
At the Central headquarters of Hang Seng Bank, a man with glasses rushed in. "Mr. He, we're running out of cash," he reported.
"We just recovered 40 million two days ago. It's gone already?" He Shanheng's face changed instantly.
"Yes," the man said. "There are just too many withdrawals. Everyone's taking out thousands, even tens of thousands. I've already instructed all staff to persuade customers not to withdraw, but it's been largely ineffective. In fact, the number of people coming in is only increasing."
"Did we try slowing down withdrawals at the counters? To buy more time?" He Shanheng asked.
"We did," the man replied, "but that only made the lines longer. Once the media picked it up, it drew even more people. Worse, frustrated customers started causing incidents. A few of our staff have been assaulted. Even the police we called in were there to withdraw money."
He Shanheng frowned deeply. He had been working tirelessly to raise capital, but the pace at which funds were coming in couldn't keep up with the rate they were going out.
Just then, another person entered the room to report, "Mr. He, the Lin family reached out through intermediaries. They want to know the bank's actual liquidity situation. They're asking for transparency, especially since they're shareholders."
"We're not a public company. What's the point of telling them? They can't even cash out," He Shanheng muttered, then sighed. "But we have no other options now. Ah Wai, call for an emergency shareholder meeting. Have everyone attend."
"Yes, sir," Ah Wai answered and left quickly.
When Yang Wendong received the notice, he naturally went to the Hang Seng Bank Building the next day.
"Mr. Yang," He Shanheng greeted each arriving shareholder warmly.
"Mr. He, you must be under a lot of pressure these days," Yang Wendong said.
"The worst thing for a bank is this kind of crisis," He Shanheng sighed. "There's nothing wrong with our operations, yet we're still facing a run. It's an undeserved disaster."
"Business is like that," Yang Wendong said. "It takes more than competence—it takes luck. Sometimes you get dragged down by others, and there's nothing you can do about it."
"You're right. Please, come in," He Shanheng gestured toward the meeting room.
"Sure." Yang Wendong nodded and walked in.
The attendees were all notable figures in Hong Kong—many were second-generation heirs of old wealthy families. Most of them, however, faded from prominence by the 1970s or 1980s—either because they couldn't survive the 1967 economic crisis or because they emigrated.
There were also several of Hang Seng's early founders: Lin Bingyan, Leung Zhiwei, Sheng Chunlin, and He Tian.
Once a dozen or so people had arrived, He Shanheng began the meeting. "Everyone, I believe you're all aware of our current situation. Regarding our cash reserves, I must inform you that Hang Seng Bank has essentially run dry. This is despite my extensive efforts to raise capital over the past few weeks."
There was no point in hiding it. The entire city knew depositors couldn't get their money. Even efforts to raise emergency funds weren't a secret—many people in the room had their own intelligence networks.
"That fast?" Some attendees exchanged shocked glances. They had known things were bad, but not this bad.
"Mr. He, what do we do now?" someone asked.
He Shanheng replied, "I'm hoping all shareholders can contribute funds—part as a capital injection, part as a loan to the bank.
I can assure you, if we make it through this, the returns on these emergency loans will be very generous."
As soon as he finished, everyone in the room frowned. Some whispered among themselves. Even Yang Wendong remained silent.
In truth, if he didn't know that HSBC would eventually take over Hang Seng, he wouldn't dare put money in either. Liu Chong Hing Bank's failure was a cautionary tale. Even though the government had stepped in, it had only protected most depositors—investors, shareholders, and lenders all suffered serious losses. And why would the government cover their losses?
There was no way it would. Not then, not now.
Seeing that many of the shareholders present were visibly uneasy, He Shanheng added, "Let me put it this way—if we don't save the bank, everyone's prior investments will be gone anyway. Saving it is the only chance we have to recover anything."
"But what if we put more money in and Hang Seng still collapses?" a man in his early 30s said coldly. "Mr. He, we trusted you, which is why we invested in Hang Seng Bank. Now that the bank is in this state, shouldn't you take some responsibility?"
"Mr. Li, if the current situation were due to my negligence, I'd absolutely take responsibility," He Shanheng replied, his expression hardening. "But this bank run is not of our making—it's an external disaster. No one in my position could have prevented it.
Right now, the priority is to save the bank. If we survive this, you're all welcome to bring in a third-party audit. If I'm found to be at fault in any way, I'll accept full responsibility."
The room fell silent again. It was true that He Shanheng wasn't directly to blame—this was a crisis affecting all Chinese banks in Hong Kong.
At this point, Yang Wendong spoke. "Everyone, Mr. He is right. The most important thing now is solving the problem. Accountability can come later."
Now that Yang Wendong had spoken, no one else pressed the issue further. He Shanheng shot him a grateful glance.
But even though no one was talking about blame anymore, convincing the shareholders to put up new capital was another matter entirely. More than an hour passed, and no one was willing to take the lead. One by one, the attendees began to find excuses to leave.
In the end, only a few of Hang Seng Bank's founding members remained, along with Yang Wendong and one other shareholder.
Finally, He Shanheng turned to Yang Wendong. "Mr. Yang, would you mind taking a walk with me?"
"Sure," Yang Wendong agreed.
The two of them headed downstairs and strolled to a small patch of greenery outside the building.
With a heavy sigh, He Shanheng said, "Mr. Yang, when you advised me to keep more liquidity on hand, you were absolutely right. But I was too confident, and I lent most of it out."
"I was just speculating at the time—I never imagined it would actually come true," Yang Wendong replied. "From a banking standpoint, Hang Seng was operating normally, with proper risk controls. Holding too much idle cash would've meant significant losses. It wasn't unreasonable."
"Exactly. I was confident, too. I never thought we'd get hit by a run for no reason. It's so frustrating. I managed the bank carefully all along," He Shanheng said, then hesitated. "Mr. Yang, I'm hoping you can help Hang Seng."
"You're asking me to lend money to the bank?" Yang Wendong asked.
"That would be ideal, yes. But more importantly, I hope you'll come forward publicly in support of Hang Seng," He Shanheng explained. "With your reputation in Hong Kong, your endorsement would calm a lot of people. It's the most effective way to stop the panic."
"Mr. He, I may not have that kind of power," Yang Wendong said, shaking his head. "The Changxing Group may be doing well, but Hang Seng Bank has seven or eight hundred million in deposits. I can't possibly guarantee all of that."
At present, Changxing Group was generating over 100 million in annual profit and had more than that in liquid assets. It also had significant dollar reserves overseas. But that was confidential—only a few people within the company even knew the full picture.
From the outside, Changxing looked like a large private group, but no one could say for certain whether it had a few billion or not. It wasn't a listed company, after all. And assets were not the same as cash. Many firms with 1 billion in market value couldn't even come up with 200 or 300 million in cash.
More importantly, this kind of rescue came with enormous risk. What would Yang Wendong get in return? It wasn't a good deal—at least, not unless the conditions changed.
"At the very least, it would help stabilize the situation," He Shanheng said. "I know it's a big ask, but please consider it."
"Mr. He, I can't promise to backstop all of Hang Seng's deposits," Yang Wendong said firmly. "Let me ask you this: if the roles were reversed, and East Asia Bank were the one facing collapse while Hang Seng was fine, and Mr. Li Fushu came to you for help—would you say yes?"
He Shanheng fell silent. He knew Yang Wendong had a point. It was an unreasonable request—but he was out of options.
Yang Wendong continued, "That said, I'm willing to help financially. But I'm not just looking for interest—I want equity."
Helping someone meant taking a risk. As a time traveler, Yang Wendong had countless investment opportunities. He wasn't going to put his money into something unless there was a real return.
"How much equity would you need? And how much would you invest?" He Shanheng asked.
No one here was doing charity. If someone was going to help, they wanted a return. Besides, if Yang Wendong became a shareholder, that would tie their interests together—at least in the short term, that was a good thing.
"I can put up 50 million HKD," Yang Wendong said. "In return, I want a 25% stake."
He Shanheng's expression changed. "Mr. Yang, that's far too low. The last time we raised capital, Hang Seng was valued at 320 million. Now you're valuing us at just 200 million?"
"Given the current situation, I'm taking on enormous risk," Yang Wendong replied calmly. "Look at it from my perspective—that valuation isn't unreasonable."
In reality, if Yang Wendong didn't know that the government and HSBC would eventually step in to save Hang Seng, he wouldn't consider the deal at all. If the bank went under, he'd be taking a massive hit.
"You'd want a board seat, too?" He Shanheng asked.
"Yes," Yang Wendong said. "By law, I would have voting rights. With over 16% ownership, I'm entitled to a seat on the board."
Under Hong Kong law, a joint-stock company must have at least five board seats. If there were more, voting rights would be allocated proportionally.
"I'll need to think about it," He Shanheng said, frowning.
"Of course," Yang Wendong replied. "I'll get the funds ready soon. But if you don't agree, please let me know right away."
Though Changxing Group was steadily converting its HKD into USD, the process took time. For now, there was still plenty of HKD on hand, and putting some of it into Hang Seng made strategic sense.
"Alright," He Shanheng agreed.
Back at Changxing Tower, Yang Wendong summoned Zheng Zhijie and Fang Xianming, the head of Changxing Financial. "You two will work together on this," he instructed. "Reach out to the other Hang Seng Bank shareholders. See if any of them are willing to sell their shares."
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