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Our reporters Hao Yajuan and Qin Yufang report from Shanghai and Guangzhou

"It's hard to grab an order" and "It all depends on your hand speed to buy it"... Currently, deposit interest rates continue to decline, and "out of stock" of large-denomination certificates of deposit has become the norm. Some scalpers have started the business of "grabbing" large-denomination certificates of deposit on behalf of others.

A reporter from China Business News noticed that a number of posts on a certain platform offered to help others buy large-denomination certificates of deposit. The posts said: "Here is a method to buy a certain bank's 3.65% large-denomination certificate of deposit, with a 100% chance of winning."

A banking insider told the reporter: "Because of quota control, large-denomination certificates of deposit have become a scarce resource. Banks generally use it as a hook product and will only give some large-denomination certificates of deposit quotas if they are 'matched'. Ordinary people cannot buy them, so scalpers will help to buy them, working together inside and outside to get kickbacks."

Ai Yawen, an analyst at Rong360 Digital Technology Research Institute, pointed out that buying large certificates of deposit on behalf of others may violate the bank's sales regulations and financial regulatory policies. If internal personnel violate the regulations, it may violate laws and regulations, and both investors and buyers may face penalties. In addition, when investors hand over their funds to buyers, there is a risk of misappropriation or fraud. During the purchase process, investors need to provide personal bank account information, which increases the risk of personal information leakage and may lead to theft of funds or identity fraud.

Large-denomination certificates of deposit that are hard to come by

"The (large-denomination certificates of deposit) we bought before all had (interest rates) of 4.2% and 4%, and the quotas were large. Now we have to grab the (interest rate) of 3%," said investor Mr. Wang with emotion.

Investor Ms. Zhao said: "Even if you set the alarm, you can't get a large-denomination certificate of deposit. The ones you can buy now are all transferred, and the remaining term is less than three years."

In late July, a new round of deposit rate cuts were implemented by large state-owned banks and joint-stock banks, and deposit rates entered the "1" era. Reporters noticed that most banks have stopped selling large-denomination certificates of deposit, and some small and medium-sized banks have issued large-denomination certificates of deposit with a three-year interest rate of more than 3%, becoming a "hot commodity" in the eyes of investors.

Ai Yawen told reporters: "The current large-denomination certificate of deposit market is showing a tight supply and demand situation, especially for products with a term of more than three years, which are hard to find on the shelves of many banks. Some banks also have restrictions on the minimum deposit amount and purchase qualifications for large-denomination certificates of deposit."

A retail business person at a joint-stock bank also revealed to reporters that the bank has stopped selling large-denomination certificates of deposit for individual customers. The interest rate of large-denomination certificates of deposit for three years before the suspension of sales has dropped to about 2.3%. Now only large-denomination certificates of deposit for corporate customers still have some quotas. "But the quota control is also very strict, and it is considered a scarce resource. We generally use this type of large-denomination certificate of deposit product as a hook product to match the product portfolio for enterprises."

"Wherever there is a transaction, there are scalpers." Grabbing large-denomination certificates of deposit on behalf of others has become a new way of playing. Some people sell guides, while others directly help to grab certificates on behalf of others and earn service fees.

The retail business person from the above-mentioned joint-stock bank revealed that large-denomination certificates of deposit are currently a scarce resource for all banks. Ordinary customers cannot buy them, so scalpers may appear to help connect them.

On a certain platform, a user posted: "Here is a method to buy a certain bank's 3.65% large-denomination certificates of deposit. 100% success rate, never failed, the price is only 8.8 yuan." After the reporter contacted them, the other party said that he needed to add WeChat separately and send the buying tutorial after the transfer.

According to media reports, some scalpers said they could "grab" large-value certificates of deposit on behalf of others, charging a customer service fee ranging from 150 to 500 yuan, with most being around 200 yuan. However, customers are required to provide their account, password and other information, and scalpers directly operate in the customer's account and use tools to grab the order.

According to Guo Fengli, an expert at Kant Think Tank and a lawyer at Beijing Lianggao Law Firm (Shanghai), the existence of the phenomenon of scrambling for large-denomination certificates of deposit reflects, to a certain extent, the asymmetric information in the market and the rampant speculation. Scalpers use technical means and quick response capabilities to seize market opportunities and make profits from them.

Bank of ChinaShao Ke, director of the Institute's banking and integrated business team, said that the snatching of large-denomination certificates of deposit is a manifestation of the mismatch between supply and demand. Bank deposit rates continue to decline, and the asymmetric downward adjustment pattern has led to a flatter interest rate curve. Medium- and long-term large-denomination certificates of deposit with higher interest rates have become more scarce, making them more difficult to purchase. Some investors have tried to purchase these products through other channels.

It is worth noting that the risks of purchasing large-value certificates of deposit through scalpers should also be guarded against. Shao Ke pointed out that during the purchase process, investors need to provide sensitive information such as personal identity and bank account to the purchaser, which may be abused and bring risks to investors.

Guo Fengli stressed that investors should enhance their awareness of personal information protection and avoid providing sensitive information to unidentified intermediaries. At the same time, banks should also strengthen customer information security protection to prevent information leakage.

Shao Ke also said that the purchasing process lacks a fund monitoring mechanism, and there may be a risk of investors' funds or certificates of deposit being misappropriated, so we must be vigilant about the fund security risks involved.

In Guo Fengli's view, although the phenomenon of grabbing large-denomination certificates of deposit on behalf of others has met the needs of some investors to a certain extent, the risks behind it cannot be ignored. Investors should maintain a rational investment attitude, enhance risk prevention awareness, and choose formal channels for transactions. At the same time, banks should also strengthen supervision and crackdown efforts to maintain market order and investor rights.

As of press time, the content of several posts that previously stated “Purchasing large-denomination certificates of deposit on behalf of others” has been changed to “How to buy large-denomination certificates of deposit for sale.”

Alternative products are favored

The tight supply of large-denomination certificates of deposit also reflects the fact that in an environment of continued interest rate declines, investors' demand for investments that are both safe, stable and high-yielding is difficult to meet.

A research report by Huabao Securities shows that as of July 29, the six major state-owned banks and 12 joint-stock banks have completed the reduction of deposit interest rates, with fixed deposit rates of less than one year reduced by 10BP and fixed deposit rates of more than one year reduced by 20BP.

After the new round of interest rate cuts, the yield of wealth management products has further declined. According to Puyi Standard data monitoring, among the newly issued wealth management products in the week from July 22 to July 28, 2024, the average performance benchmark of open-end products was 2.59%, and the average performance benchmark of closed-end products was 2.90%.

The retail business personnel of the above-mentioned joint-stock bank emphasized that the current residents' risk appetite is still low, and they prefer products with low volatility, short holding period and relatively high returns. "Compared with the net value fluctuation of wealth management products, large-denomination certificates of deposit with a yield of more than 3% are naturally the first choice for investors. However, in an environment of low interest rates and low interest rate spreads, banks are trying to reduce their liability costs as much as possible. Many banks have chosen to stop selling large-denomination certificates of deposit or lower their interest rates."

Huabao Securities further analyzed in its research report that, for banks, by stopping the sale of long-term large-denomination certificates of deposit, they can reduce high debt costs, optimize debt structure, and stabilize interest rate spreads. From the perspective of the industry as a whole, by the end of 2023, the net interest margin of banks fell to 1.69%, falling below the 1.7% mark. Reducing the cost of medium- and long-term time deposits or certificates of deposit with higher costs will help ease the pressure on net interest margins and improve the level of bank operations.

However, the above research report also emphasized that some regional small and medium-sized banks have gone the other way and increased large-denomination certificates of deposit products against the trend to increase customer acquisition. This is due to differences in the liability structure and market competitive position of different banks, so the adjustment rhythm and method will also be different.

From the perspective of market performance, affected by the reduction in deposit interest rates, large-denomination certificates of deposit have seen a "fall in both quantity and price", and the interest rates of large-denomination certificates of deposit issued by different types of banks have diverged to a certain extent. Shao Ke pointed out that the interest margin of large and medium-sized banks has continued to decline, and it is urgent to control high-cost liabilities. The motivation for issuing large-denomination certificates of deposit has declined, especially for medium- and long-term products with higher interest rates. The overall interest rate level has also declined accordingly with the reduction in deposit listing rates. The interest margin of some small and medium-sized banks is at a high level, and the demand for funds is relatively strong. The enthusiasm for issuing large-denomination certificates of deposit remains unabated. Not only are the quotas sufficient, the terms are flexible and diverse, but the interest rates are also relatively high.

"From the demand side, deposit interest rates are generally lowered at present. The interest rates of large-denomination certificates of deposit are relatively high and support transfer. They have high liquidity and security and are still favored by investors," Shao Ke pointed out.

At the same time, products that replace large-denomination certificates of deposit are also gaining more and more attention from investors and financial institutions. The aforementioned Huabao Securities research report analysis pointed out that the annualized yield of non-cash-managed fixed-income wealth management products with good liquidity is still above 2.5% in the past month, while the annualized yield of closed-end 1- to 3-year wealth management products that replace large-denomination certificates of deposit is above 3% in the past year, which is more than 100BP higher than the interest rate of fixed deposits of the same period, and is very attractive to investors.

Overall, the downward trend in interest rates is difficult to change. In this environment, how should investors allocate their assets properly?

"Due to the downward trend in economic growth, the decline in investment returns has led to a continuous decline in the yields of various asset management products and deposit rates. The downward trend in deposit rates will further lead to a decline in the returns of wealth management products invested in high-interest deposit assets." The above research report pointed out that in a low-interest market environment, investors should try to adjust their investment mentality. First, adjust and lower expectations for investment returns. Secondly, according to their own risk preferences and investment risk-return requirements for each sum of money, comprehensive asset allocation. For conservative investors, in addition to deposit products, to replace the "absence" of medium- and long-term large-denomination certificates of deposit, they can appropriately allocate low-volatility and stable fixed-income wealth management products with a term of six months to three years and some structured wealth management products with principal protection strategies.

Many investors believe that “fixed income +” wealth management products are more attractive to those who prefer low-volatility and stable investments because of their relative stability and high-yield characteristics.

Wang Jie, a researcher at Puyi Standard, said that since the beginning of this year, the market environment has been complex and changeable, and pure fixed-income financial products have been unable to meet the income needs of some investors. The "fixed income +" strategy uses fixed-income assets as the base position, and combines them with low-correlation assets such as stocks and bonds to diversify risks. Through diversified asset allocation, it increases product returns while controlling volatility and drawdowns, and is increasingly favored by investors.