PANews reported on December 2nd that, according to the Financial Times, several Chinese banks have successively stopped selling long-term, large-denomination certificates of deposit (CDs). According to investigations, six major state-owned banks—Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China—have completely stopped selling 5-year large-denomination CDs, and some joint-stock banks and city commercial banks have also begun to scale back their long-term deposit business.
A search of the official apps of the six major banks revealed that the terms of large-denomination certificates of deposit (CDs) have become significantly shorter, with the longest term being only 3 years. Interest rates have also decreased compared to last year. For example, the Industrial and Commercial Bank of China (ICBC) offers a 1.55% interest rate for its 3-year CDs, while the 1-year and 2-year CDs both offer 1.20%. Furthermore, the Bank of China and China Construction Bank have removed 5-year CDs, with only a small number available in their transfer lists.
It is understood that the withdrawal of long-term large-denomination certificates of deposit (CDs) is not a sudden move. In May of this year, the Bank of China issued an announcement stating that 5-year large-denomination CDs would only be sold to specific customers, but now they have been completely discontinued. At the same time, 3-year large-denomination CDs are also experiencing a shortage, and some banks have reduced their longest sales term to 2 years. Liu Yinping, an analyst at the Rong360 Digital Technology Research Institute, believes that this change is related to the current downward trend in interest rates, and banks tend to reduce the supply of long-term deposit products in a low-interest-rate environment. On the other hand, in the past two years, residents' enthusiasm for depositing has been high, and the scale of bank deposits has grown rapidly, while credit demand has been weak, and banks are not very enthusiastic about absorbing long-term deposits.
