Regarding large-denomination certificates of deposit, many foreign banks have put them on the shelves →

This article is reproduced from [CCTV Finance];

Large-denomination certificates of deposit are large-denomination deposit products issued by financial institutions. The minimum deposit is usually 200,000 yuan, covering multiple investment periods from 1 month to 5 years.

Recently, many foreign banks such as HSBC, Standard Chartered, Wing Fung, and East Asia have intensively launched RMB large-denomination certificates of deposit. The interest rates of some three-year products are nearly 40 basis points higher than those of large state-owned banks with the same term. Why are foreign banks increasing their investment in RMB deposit products at this time?

Many foreign banks issue RMB certificates of deposit, specifically:

SinoPac Bank (China)’s three-year personal large-denomination certificate of deposit, with a minimum deposit of 200,000 yuan, has an annual interest rate of 1.92%, which is nearly 40 basis points higher than products of the same term from major state-owned banks;

Bank of East Asia (China) issued a number of three-year certificates of deposit during the year, with an annual interest rate of 1.90%;

HSBC Bank (China) 1-month to 6-month certificate of deposit, annual interest rate 0.85% to 1.3%;

Standard Chartered Bank (China) issues large-denomination certificates of deposit covering 1 month to 1 year, and the annual interest rate for 6-month and 1-year deposits starting from 500,000 yuan can be up to 1.2%.

Lou Feipeng, a researcher at the Postal Savings Bank of China, said that the recent appreciation of the RMB has been relatively obvious, and residents’ willingness to hold RMB has increased.If foreign banks want to expand cross-border settlement, trade financing, wealth management and other businesses, they need to increase RMB deposits. Issuing large-denomination certificates of deposit is a relatively good choice.At the same time, foreign banks have relatively few outlets in China, and their advantages in absorbing deposits are relatively unclear. They also need relatively high interest rates to attract investors.

How to choose the intensive issuance of large-denomination certificates of deposit?

Regarding foreign banks, since October, many domestic joint-stock banks and private banks have successively issued three-year and five-year certificates of deposit, and the interest rate on three-year certificates of deposit of some private banks has reached 2%. At present, the interest rates of large state-owned banks for three-year certificates of deposit are generally 1.55%, and for five-year certificates of deposit, they are about 1.60%.

Zeng Gang, president of Tianfu Liyan Financial Research Institute, said that the most obvious advantage of large-denomination certificates of deposit is safety, because they are essentially bank deposits and are protected by deposit insurance regulations. He suggested that investors should also comprehensively compare factors such as term, minimum deposit amount, early withdrawal rules and whether the pledge is transferable when making a choice.