Chinese Regulators Crack Down on Banks Offering Incentives
Chinese banks, facing stiff competition for deposits, have reportedly been barred from giving away gifts like the popular Lovebourg dolls. This move by financial regulators underscores the challenges banks are encountering as interest rates and profit margins decline.
Sources indicate that the Zhijiang branch of the National Financial Regulation Authority has directed local banks to avoid non-compliant incentives aimed at attracting new customers.
This issue came to light partly due to the marketing efforts of Ping An Bank, which had been promoting celebrity-endorsed blind box toys, including those featuring Lisa from the popular K-Pop group Blackpink.
Individuals familiar with the situation, who requested anonymity, mentioned that banks often hand out free items like rice, small appliances, and electronic gifts, which can inflate costs and harm profit margins.
The marketing campaign’s buzz spread quickly on Xiaohongshu, a Chinese social media platform, catching the attention of potential savers but also drawing criticism from state media, which pointed out that such approaches aren’t sustainable in the long run.
Chinese banks are now navigating a complicated landscape as they manage deposit margins and protections that have reached unprecedented levels. Just last month, major banks implemented deposit rate cuts, while smaller institutions are still facing legal challenges, leading to interest rates for term deposits dropping to slightly over 1%.
The Zhejiang Banking Regulator has called for an immediate halt to any products linked to non-compliant deposit practices, requesting the removal of related advertising materials. It’s still unclear if other branches of the regulator have issued similar directives.
Regulators have not yet commented on the matter. Meanwhile, Ping An Bank has opted not to provide additional comments, stating that the promotional initiative was initiated by one of its local branches.
Under regulations set in 2018, China indicated that commercial banks should refrain from attracting deposits through methods deemed inappropriate, such as offering physical gifts or cash rewards.
