The competition for deposits is heating up among China's large state-owned banks, with lenders rushing to hike their deposit rates.
Industrial and Commercial Bank of China (1398) - the largest lender - raised its two-year and three-year deposit rates to 1.1 times the benchmark - the ceiling set by the central bank, 21st Century Business Herald reported yesterday. It added that the move is currently limited to the bank's eastern branches.
The benchmark two-year rate stands at 3.75 percent with the three-year rate at 4.25 percent.
"This is the first time that we lifted the mid-range deposit rate to as high as the ceiling allowed after the central bank gave us the freedom last July," the paper quoted an ICBC employee as saying.
The employee said headquarters advised all its branches to keep the two- and three-year rates "unchanged," but to raise the short-term ones - including three-month, six-month and one-year - to 1.08-1.096 times above the central bank's benchmark.
The benchmark three-month rate is now at 2.6 percent, six-month at 2.8 percent and one-year at 3 percent.
Meanwhile, Bank of China (3988) has authorized its provincial branches to lift its two-year rate by 1.05 times and three-year rate by 1.02 times. Both ICBC and BOC kept their five-year deposit rate unchanged at 4.75 percent.
The rate hikes by large banks are seen as "rupturing the harmony" of the mainland's banking sector.
The bigger players such as ICBC and BOC, which have larger networks and credit resources, rarely offer preferential rates to depositors, while smaller players offer a higher rate.
Separately, as the central government pledges to open the financial market to private enterprises, many companies have decided to establish banks.
Midea Group - a leading domestic electrical appliance manufacturer - said it has applied for a license to run a retail bank, Southern Metropolis Daily reported.
Electronic and household gadget retailer Suning Appliance won official approval to set up "Suning Bank" last week.