UPDATE 1-Chinese officials in bank-run town investigated for corruption

Mon May 5, 2014 6:17am EDT

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(Adds second official under investigation)

SHANGHAI May 5 (Reuters) - Two Chinese Communist Party officials from a county where a bank run occurred in March are under investigation for corruption, the party's anti-graft watchdog said on Monday.

Tian Weiyou, governor of Sheyang county in east China's Jiangsu province, was being investigated for "serious law and discipline violations," a euphemism for corruption, the Central Commission for Discipline Inspection said on its website (www.ccdi.gov.cn/).

Xu Chao, the former top Communist Party official in Sheyang county, is also under investigation, the commission said in a separate statement.

It did not elaborate.

Hundreds of depositors thronged a branch of Jiangsu Sheyang Rural Commercial Bank in late March after rumours spread that banks were running out of cash.

The rumours were apparently unfounded and depositors were able to withdraw cash, but the news caught nationwide attention, reflecting growing public anxiety as regulators signal greater tolerance for default.

The rumours found especially fertile ground in Sheyang after a failure of three less-regulated rural credit co-operatives in January.

During the March incident, the county government posted a video on its website in which Tian assured residents that "the interests of all depositors will be protected."

It is not clear if the graft investigation is related to the January or March incidents.

President Xi Jinping has made tackling widespread corruption a central goal of his administration, saying that the problem could threaten Communist Party rule. (Reporting by Gabriel Wildau; Editing by Robert Birsel)