In a move to reduce debt costs, mainland private banks that once attracted depositors with high interest rates are gradually pulling long-term fixed deposit products off the shelves. They are speeding up the departure from the “high-interest attracting deposits” model.
Recently, Zhongguancun Bank announced that from May 30, the bank’s branches, mobile banking app, corporate internet banking, and other channels temporarily removed individual and unit three-year fixed deposit products. Existing three-year fixed deposit products will not be affected by this adjustment, and will continue to accrue interest at the agreed-upon rate until maturity or rollover upon maturity.
According to a report by “Jiemian News,” currently, several private banks’ apps have temporarily disabled the purchase of 5-year and 3-year fixed deposit products.
In October 2025, Zhongguancun Bank lowered interest rates on some deposit products. The announcement at that time indicated that three-year and five-year fixed deposit products had been removed.
Customer service for Zhongguancun Bank stated that in April 2024, they removed the five-year fixed deposit product, then temporarily removed the three-year fixed deposit product, and once again took it down on May 30 this year.
Not only Zhongguancun Bank but also Jilin Yilian Bank, Weihai Blue Ocean Bank, Hunan Sanxiang Bank, Zhejiang NetsUnion Bank, Shanghai Huarui Bank, Jiangsu Suqian Bank, and Beijing Zhongguancun Bank apps temporarily disabled the purchase of 5-year fixed-term deposit products. Yilian Bank and Blue Ocean Bank marked their products as “sold out,” while the other bank apps did not display related products.
For many years, private banks have attracted customers with higher deposit rates, carving out market space outside of large state-owned and joint-stock banks.
During periods of higher interest rates, some private banks’ three-year and five-year fixed deposit rates once exceeded 3%, much higher than similar products from large banks, attracting many depositors seeking stable returns.
However, in the past two years, as China entered a low-interest-rate environment, bank deposit rates continued to decline, and the high-interest attracting deposits gradually lost their survival space.
Taking Zhongguancun Bank as an example, their official app currently shows only two-year, one-year, six-month, and three-month fixed deposit products, with annual interest rates of 1.8%, 1.6%, 1.4%, and 1.2% respectively. This means that after Zhongguancun Bank removed the three-year fixed deposit product, their fixed deposit annual interest rates have all dipped below the “1% mark.”
Some banks are even experiencing a phenomenon of “inverted” deposit rates. For instance, Hunan Sanxiang Bank currently offers a 2% interest rate for the two-year deposit, higher than the 1.95% for the three-year deposit. This suggests that banks prefer to retain flexibility for future repricing rather than locking in funds for an extended period.
Industry insiders point out that the deeper reason behind this round of removing long-term deposit products lies in weak loan demand.
A private bank executive told “Jiemian News” that most of the products being removed are high-interest deposit and automatic rollover products, aimed at reducing debt costs. With lending activities relatively challenging, certain private banks are not lacking in deposits.
“If loans cannot be issued, what’s the point of having so many high-interest deposits,” the aforementioned executive candidly stated.
Analysts from urban commercial banks believe that the removal of medium- and long-term deposit products by private banks is mainly due to the higher interest rates on these products, coupled with reduced high-yield assets, leading to cost pressures on the banks.
In recent years, the real estate market has remained sluggish, corporate investment willingness has decreased, and there has been a decline in household borrowing demand, putting pressure on the bank’s loan business.
Data from the China Banking and Insurance Regulatory Commission show that by the end of the first quarter of 2026, the net interest margin of private banks dropped to 3.62%, a decrease of 0.21 percentage points from the end of 2025. Compared to the end of 2023, it has fallen by 0.77 percentage points.
In addition to declining deposit rates, the changes in loan demand are more worthy of attention.
Based on disclosed annual reports from 18 private banks, as of the end of 2025, seven banks experienced a decrease in loan balances compared to the previous year, while another seven banks saw a significant slowdown in loan growth.
This indicates that nearly 40% of private bank loan balances have shrunk and over 70% of banks have slowed down their loan expansion.
Industry insiders believe that the slowdown in bank loan growth often reflects insufficient confidence in corporate investment and household consumption. Due to factors such as real estate adjustments, uncertain export situations, and weak domestic demand recovery, many companies choose to reduce investment, while households tend to increase savings and reduce debt. As a result, banks absorb a large amount of deposits but struggle to effectively channel these funds into loans.
Moreover, private banks are facing transformation pressures. With the high-interest attracting deposit model unsustainable and the shrinking profit margins of traditional lending businesses, private banks are facing new operational challenges.
Jiang Han, a senior researcher at the Panguso Institute, stated that private banks in the future need to move away from relying solely on expanding scale, enhance autonomous risk management capabilities and customer acquisition abilities, delve into niche markets, and transition from simple retail finance to technology finance and industrial finance.
Some urban commercial bank officials believe that banks that have long relied on high-interest attracting deposits often lack a stable customer base and core competitiveness. When the interest rate advantage disappears, these banks will face even greater survival pressure.
From discontinuing long-term fixed deposits to lowering deposit costs, the series of adjustments by private banks may seem like product changes on the surface, but they reflect not only the contraction of bank profit margins but also the economic reality of insufficient corporate investment willingness and weak household borrowing demand.