Bad HSBC Policy Raises Specter of Bank Run

NEW YORK (TheStreet) -- The term "bank run" conjures up all kind of bogeyman images, and right now it's rearing its ugly head in the U.K.

That doesn't mean a bank run is imminent here in the U.S., but in the age of global digital media, what's happening in England has American bankers thinking the once unthinkable.

The story starts in London, where customers of HSBC complained last week they couldn't withdraw large sums of money from local bank branches without asking for what amounts to a "permission slip."

According to the British Broadcasting Co., customers were being told by bank staffers they could not withdraw more than 5,000 in British pounds (or $8,253 in U.S. dollars) without having a "good reason" for making the withdrawal.

HSBC admits the policy was in place, but has reversed course on making customers explain why they need to withdrawal the money:

"We ask our customers about the purpose of large cash withdrawals when they are unusual and out of keeping with the normal running of their account. Since last November, in some instances we may have also asked these customers to show us evidence of what the cash is required for.

The reason being we have an obligation to protect our customers, and to minimize the opportunity for financial crime. However, following feedback, we are immediately updating guidance to our customer facing staff to reiterate that it is not mandatory for customers to provide documentary evidence for large cash withdrawals, and on its own, failure to show evidence is not a reason to refuse a withdrawal. We are writing to apologize to any customer who has been given incorrect information and inconvenienced."

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