Structured Deposits of Chinese Banks Surge 1.19 Trillion Yuan in January, PBOC Concerned over Guaranteed Yields

Official data points to a surge in the structured deposits of Chinese banks in the first month of 2020.

Structured deposits in China rose 1.19 trillion yuan in January to hit 10.79 trillion yuan in total, according to data from the Chinese central bank.

Structured deposits nonetheless saw a full-year decline of 18.584 billion yuan in 2019, as regulators stepped up scrutiny of the products due to concerns that Chinese lenders were using them as a covert means of providing higher returns to investors.

While the interest rate for one-year renminbi deposits is currently just 1.5%, as of 9 March one of Ping An Bank’s structured deposit products which is tied to the Shenzhen and Shanghai stock exchanges provides a maximum return of 5.50% and a minimum return of 0.50%.

Similar products from China Merchants Bank, Industrial Bank Co. and Everbright Bank provide maximum returns of between 3.60 – 3.83%, and minimum returns of 1.75%.

The Chinese central bank said on 10 March that it was concerned about the high guaranteed yields of the structured deposits offered by certain domestic lenders, prompting it to issue the “Peo­ple’s Bank of China No­tice Con­cern­ing the Strength­en­ing of De­posit In­ter­est Rate Reg­u­la­tion” (中国人民银行关于加强存款利率管理的通知).

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