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Reuters
22-05-2025
- Business
- Reuters
Former PBOC deputy governor Liu Guiping to head Bank of China, sources say
BEIJING, May 22 (Reuters) - China will appoint financial veteran Liu Guiping as chairman of Bank of China ( opens new tab, the nation's fourth largest state-owned bank, two sources with knowledge of the matter said. Liu, who currently serves as executive vice mayor of Tianjin city, will replace current chairman Ge Haijiao, who will move to become governor of China's northern Shanxi province, said the sources, who declined to be named as they're not authorised to speak to the media. The appointments will be announced as soon as this week, the sources said. The Tianjin municipal government, Shanxi provincial government, and Bank of China did not immediately reply to Reuters' request for comment. Liu, 59, has held several prominent positions in China's financial sector, including deputy governor of the People's Bank of China from November 2020 to April 2022 and president of state lender China Construction Bank ( opens new tab from March 2019 to November 2020. He was executive vice president at sovereign investor China Investment Corp from 2014 to 2016. Before that, Liu spent his career at major state lender Agricultural Bank of China ( opens new tab for more than two decades. Ge will succeed Jin Xiangjun, who was placed under investigation in April by China's anti-graft organ on suspicion of serious violation of law and discipline, according to the website of the Central Commission for Discipline Inspection. Chinese President Xi Jinping has cracked down on corruption involving party members, saying in January that it is the biggest threat to China's Communist Party.
Reuters
20-05-2025
- Business
- Reuters
China entices savers to cross risky Rubicon
HONG KONG, May 20 (Reuters Breakingviews) - The People's Republic has just entered a new era: on Tuesday, one-year bank deposit rates dipped below 1% for the first time ever. As a consequence, savers may shift more of their record 160 trillion yuan ($22 trillion) parked there into stocks, long a Beijing goal. But a murky economic outlook means the timing could be poor for individuals and lenders alike. The cuts from five of the largest state banks, including Bank of China ( opens new tab and China Construction Bank ( opens new tab, came as the central bank changed its monetary policy to "moderately loose" from "prudent" for the first time in 14 years. On the same day, the central bank cut its benchmark lending rate as well. Chinese deposit rates have been trending lower for years – they were at 3% a decade ago and above 10% in the 1990s. Seeing the one-year rate drop below 1%, though, may breach a psychological threshold for many savers. They have been squirrelling their cash away into bank accounts at a decent clip: in the 12 months to March, total household deposits rose 10.3%, according to the PBOC's latest quarterly report. That's 118% of 2024's GDP. Planners have long been trying to cajole savers to spend more. Of late, they have identified reflating, opens new tab stock prices as an effective way to shore up consumer confidence. On paper, Beijing's push to get companies to pay higher dividends is an added incentive. The annual yield at large lenders like the Bank of China is close to 6%, for example. Trouble is, maintaining that looks challenging. Banks' net interest margins and returns on equity have been falling thanks to rate cuts and weak credit demand. A drop in deposits will exacerbate the trend if it forces up funding costs. More broadly, the $18 trillion economy has been flirting with deflation: the consumer price index has been hovering close to negative territory for more than two years. And the trade war instigated by U.S. President Donald Trump leaves a question mark hanging over the pace of growth. Granted, Chinese stocks often aren't well correlated to the economy's underlying performance. But if policymakers had the luxury of being able to pick a moment to entice savers to ditch deposits for the stock market, now would be an unlikely choice. The People's Bank of China on May 20 lowered the one-year loan prime rate by 10 basis points to 3% from 3.1%. It also cut the five-year LPR by the same margin to 3.5%. On the same day, five of China's biggest state-owned banks cut the interest rate they pay on deposits by 15 basis points to 0.95%.
Business Times
20-05-2025
- Business
- Business Times
China banks cut deposit rates to aid margins, drive spending
MAJOR Chinese banks cut deposit rates again, in the latest efforts to preserve their shrinking profitability and drive consumers to spend more amid a flagging economy. Lenders including the Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and China Merchants Bank trimmed rates across maturities on Tuesday (May 20). One- and two-year fixed deposit rates fell by 15 basis points, according to official announcements and updates on their mobile apps. Rates on three- and five-year deposits were slashed by 25 basis points. The cuts on the country's more than 300 trillion yuan (S$54 trillion) of deposits came as the recent package of government measures to stimulate the world's second-largest economy has further squeezed bank profits. China earlier this month reduced its policy lending rate as it ramped up efforts to help an economy caught in a second trade war with the US. Meanwhile, Chinese banks also lowered their one-year and five-year loan prime rates (LPRs) – a benchmark for their best customers – by 10 basis points on Tuesday, a move in line with market expectations. That brought the one-year LPR, the reference for corporate loans, down to 3 per cent, and the five-year LPR, which is the benchmark for mortgages, down to 3.5 per cent. Chinese lenders embarked on their deposit rate cut cycle in late 2022 with a broad-based reduction, the first since 2015, after authorities urged them to boost lending. They have followed with more cuts since then in an attempt to salvage record-low margins amid weakened profitability. Two-year deposit rates have been more than halved. After Tuesday's reduction, the one-year rate on time deposit of major banks stands at 0.95 per cent, while their two-year rates are at 1.05 per cent. Their three and five-year rates are at 1.25 per cent and 1.3 per cent, respectively. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Chinese banks wealth management products gained inflows in the second quarter as clients moved money out of bank deposits into assets with higher return potential, according to a report by Shanghai Securities News on Tuesday. Total assets of fixed-income and cash management products in the market increased 8.4 per cent and 7.9 per cent, respectively, from the end of the first quarter, the report said, citing data from PY Standard as at May 19. Driven by persistent state efforts to push down borrowing costs, China's 10-year government bond yield has fallen steadily in the past few years to about 1.66 per cent, around a record low. Highlighting the challenges facing the economy despite a quick de-escalation of trade tensions with the US, the latest economic data showed China's industrial output expanded faster than expected in April while consumption disappointed. That pointed to the need for more supportive policies as economists warn of complacency after a 90-day pause on tariffs. China's prolonged property crisis, deflationary pressure and worries about unemployment are weighing on confidence among households. BLOOMBERG
New Straits Times
20-05-2025
- Business
- New Straits Times
Five of China's major state banks cut deposit rates
BEIJING: Five of China's biggest state-owned banks cut deposit interest rates on Tuesday, part of an expected move to alleviate shrinking interest margins at lenders as Beijing rolls out sweeping monetary easing measures to aid the broad economy. Industrial and Commercial Bank of China, Agricultural Bank of China, China Construction Bank and Bank of China reduced deposit rates by 5-25 basis points (bps) for some tenors, according to rates shown on the banks' mobile apps. The banks cut interest rates on time deposits by 5 bps to 0.05 per cent, and reduced rates on one-year time deposits by 15 bps to 0.95 per cent and shaved off 25 bps on three-year and five year time deposits. These deposit rate reductions should guide smaller lenders in making similar cuts. Reuters reported on Monday that China's major state banks plan to cut their deposit rates from Tuesday, citing sources. Chinese authorities announced a raft of stimulus measures earlier this month, including interest rate cuts and a major liquidity injection, as Beijing steps up efforts to soften the economic damage caused by the trade war with the United States. China is due to release its monthly fixing of the Loan Prime Rate, a benchmark for most corporate and household loans, 0100 GMT.
New Straits Times
20-05-2025
- Business
- New Straits Times
China Construction Bank cuts deposit rates
BEIJING: China Construction Bank cut deposit rates on Tuesday, part of an expected move by Chinese state-owned banks to alleviate shrinking interest margins at lenders as Beijing rolls out sweeping monetary easing measures to aid the broad economy. The bank reduced deposit rates by 5-25 basis points for some tenors, according to rates shown on its mobile app.
