Some Chinese state banks will cut deposit rates on Monday - sources
Reuters
Published Apr 24, 2022 08:05AM ET
SHANGHAI (Reuters) - Some Chinese state banks, such as Bank of China and Bank of Communications, will cut deposit rate ceilings on Monday, joining smaller lenders, sources told Reuters.
The planned cuts come a week after regulators encouraged smaller banks to lower the ceiling for their deposit rates. The moves will also coincide with China's reduction in banks' reserve requirements, effective on Monday.
Bank of China will cut the rates for time deposits of 2-3 year tenors by roughly 10 basis points, according to two banking sources. Bank of Communications will make similar moves, said another source.
Bank of China and Bank of Communications were not immediately reachable for comment outside working hours.
It was not immediately clear if other state banks, including Industrial and Commercial Bank of China (ICBC), China Construction Bank (OTC:CICHF) (CCB) and Agricultural Bank of China (OTC:ACGBF) will also cut deposit rates, but the sources say state lenders typically move in tandem on rate moves.
Beijing has repeatedly urged banks to reduce borrowing costs for smaller companies in an economy hit by COVID-19 outbreaks, fallout from the Ukraine crisis, and capital outflows triggered by U.S. monetary tightening.
To prod banks to lend more, the PBOC has announced it would cut the reserve requirement ratio (RRR) for all banks by 25 basis points, effective from April 25.
Rocky Fan, economist at Guolian Securities, said that cutting deposit rates could incentivize banks to reduce lending rates, by lowering their own borrowing costs.
"One major reason banks are reluctant to cut loan rates now, is that the move would hurt their margins."
Lower deposit rates are also conducive to more effective use of money, and will benefit consumption and investment, Fan added.
In mid-April, the interest rate self-disciplinary mechanism, a top regulatory body overseen by the People's Bank of China, urged smaller lenders to lower deposit ceilings on time deposits by about 10 basis points, sources told Reuters.
Banks including Industrial Bank and China Zheshang Bank have already made the adjustment, according to direct sources.
Get The News You Want
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.