Kwong Yik Bank

In the late 19th-Century, demand for banking services and credit to finance investments grew among the Chinese business community and society.

[1] Currency reforms in the Straits Settlements, such as the introduction of the currency note issue in 1898, the introduction of the silver Straits Dollar pegged to the Gold Standard in 1903, and the Sterling Exchange Standard in 1906,[2][3][4] also facilitated Chinese entry into financial services, benefiting from the improved monetary stability compared to the 19th-Century.

[6] However, the relatively small amount of money available from pawnbrokers were not sufficient for financing large-scale commercial investments, and were often used for short term spending due to high interest rates.

[11] The bank operated from 26 Kling Street,[12] and aimed to cater to a wider Chinese clientele, not limited to the Cantonese community.

[14] Among the Cantonese businessmen were construction magnate and gambier planter Wong Ah Fook, who was instrumental in financing, organising and promoting the bank.

Despite his strong personal interest and association with the bank, he retained a lower-profile position of director after its founding and left management in the hands of the other promoters.

The bank announced plans to hold an internal audit and restructure its operations, and reassured that it had sufficient assets to meet its obligations.

As the crisis worsened, the shareholders replaced Lam Wai Fong with Wong Ah Fook as managing director, who offered his fortune as security in settlement of the bank's debts.

This gave managers the ability to finance unsecured loans to directors using public deposits, abusing the bank as a source of capital.

[28] However, opposition within the legislative council to the limiting of advances suggests this was likely a common practice at the time in both Chinese and European banks other than Kwong Yik.