China bans bank from luring depositors with popular Labubu dolls
The guidance came in the wake of a promotion by Ping An Bank, which has been offering Labubu collectibles in multiple cities for new depositors. - Photo: EPA-EFE
BEIJING: A Chinese lender's stunt to woo depositors with gifts including the wildly popular Labubu dolls has been barred by financial regulators, underscoring the increasingly fraught battle among banks for customers as interest rates and profit margins fall.
The Zhejiang branch of the National Financial Regulatory Administration has asked local banks to refrain from giving non-compliant perks to attract deposits, according to people familiar with the matter.
The guidance came in the wake of a promotion by Ping An Bank, which has been offering Labubu collectibles – blind box toys endorsed by celebrities including Lisa from the K-pop group Blackpink – in multiple cities for new depositors who can park in 50,000 yuan (S$9,000) for three months.
Such a practice, which often involves offering free items like rice or small home appliances, as well as e-gifts such as memberships at internet platforms, was seen as driving up costs at banks and hurting their margins, said the people.
While Ping An Bank's marketing campaign went viral on Chinese social media platform Xiaohongshu and sparked strong interest from potential savers, it also drew criticism from state media, which said it was 'not a long-term solution'.
Chinese lenders are walking a tightrope as they balance between deposit taking and protecting margins that are now at record-low levels across the sector. The nation's big banks just conducted a new round of deposit rate cuts in May, with smaller peers following suit and pushing term deposit interests down to just a little above 1 per cent.
The Zhejiang banking regulator has urged the immediate suspension of any products involved in non-compliant deposit-gathering practices, along with the removal of related promotional materials, the people said. It remains unclear whether the regulator's other local divisions have issued similar guidance.
The regulator did not immediately respond to a request for comment. Ping An Bank said the initiative started off as a small-scale project launched by a local branch, declining to comment further.
China said in a 2018 rule that commercial banks should not attract deposits through 'inappropriate means' such as giving away physical gifts or returning cash. - Bloomberg
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