China Merchants Bank quietly adjusted its three-year large-sum deposit certificate: the minimum deposit threshold soared to 1 million yuan (RMB), while the interest rate is only 1.55%, the same as the regular 3-year fixed deposit with a starting deposit of 50 yuan.
This move is not an isolated incident. In recent times, many large commercial banks have either canceled or restricted 5-year fixed term deposit products.
On the evening of December 2, the ICBC app showed that the bank is selling the fourth installment of the 2025 three-year individual large-sum deposit certificate, with a starting threshold marked at “1 million yuan” and an annual interest rate of only 1.55%.
The latest ICBC three-year fixed deposit product indicates an interest rate of “up to 1.55% annually”, with a minimum deposit of only 50 yuan. Currently, the minimum deposit threshold for large-sum deposit certificates at banks in the market is basically 200,000 yuan.
Recently, six large state-owned commercial banks in China have adjusted their deposit products, collectively removing the 5-year large-sum deposit certificates. Currently, only short-term deposit certificate products with durations of 3 years, 2 years, 1 year, and 6 months are available for investors to choose from.
Reported by “First Financial” on December 3, the end of the year is usually a peak season for banks to attract deposits, but with net interest margins continuing to be under pressure, the structural adjustment of banking deposit products has entered a critical phase.
It was observed recently that the deposit market has entered a phase of differentiated competition: on one hand, 5-year large-sum deposit certificates are accelerating their withdrawal from the market, with some state-owned banks shrinking long-term high-cost deposits and introducing large-sum deposit certificates with higher starting thresholds; on the other hand, small and medium-sized banks are making differentiated adjustments by raising deposit interest rates against the trend.
For banks, long-term deposits of 3 and 5 years represent a heavy burden as they have to pay relatively high interest rates for the next few years.
The main source of bank income is net interest margin, which is the difference between loan income and deposit costs. In the macro environment where the real economy in China is under pressure and the Loan Prime Rate (LPR) continues to decline, bank loan income is continuously decreasing. Therefore, banks are collectively “cutting” these high-cost liabilities.
Chief economist at CITIC Securities, Ming Ming, stated that the recent removal of 5-year fixed-term deposit products by many banks may imply a signal that the duration of bank liabilities is starting to shorten; in addition, the fluctuation in general deposit growth and the lack of core deposit growth also make it difficult for commercial banks to extend the duration of their assets. However, with the government’s supply of bonds and the demand for banks to increase income, there is an objective need for banks to extend the duration of their bond financing. Therefore, how to balance income and risk will become an important issue for the stable development of commercial banks.
Looking back, the withdrawal of the 5-year large-sum deposit certificate is not a sudden move. In addition to state-owned banks, the 5-year fixed-term deposit that was once considered a core configuration for long-term deposits is currently in a state of suspension in most banks.
A customer manager at China Merchants Bank said: “Large-sum deposit certificates for terms of 2 years and above have been suspended since last year. Currently, China Merchants Bank’s featured fixed-term deposit products include a 3-year product with an interest rate of 1.7%, but with a limit of 200,000.”
According to the China Merchants Bank app, currently, under the “large-sum deposit certificate” section, there are only five products left for durations of 1 month, 3 months, 6 months, 1 year, and 2 years. The interest rates for the 1-year and 2-year large-sum deposit certificate products are both at 1.4%.