Bank of China bucks trend by relaunching five-year large-denomination CDs at 1.6%, ending six-month drought among big state banks

RegulationMacro

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Bank of China has exclusively relaunched five-year personal large-denomination certificates of deposit, offering an annualized rate of 1.6%, making it the only institution among the six major state-owned banks to provide this tenor product, breaking a six-month hiatus in five-year offerings. Industrial and Commercial Bank of China, Agricultural Bank of China, and China Construction Bank retain only three-year products, while Bank of Communications and Postal Savings Bank of China have suspended sales periodically. Nationwide joint-stock banks have broadly scaled back medium- to long-term CD issuance, with only Ping An Bank still selling a five-year product. Tian Lihui, a finance professor at Nankai University, said Bank of China’s move is based on its own need to optimize its liability structure, locking in long-term stable funding to ease duration mismatch pressure, rather than signaling an industry trend reversal. In the secondary market, high-yield CDs issued in earlier years with rates above 3% are highly sought after and trade at premiums, while low-yield CDs issued recently suffer from poor liquidity. In addition, the People’s Bank of China released a draft of new rules for large-denomination CDs in June for public comment, pointing to significant divergence ahead in market tenors, rates, and liquidity patterns.