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2.7 trillion structured deposits, moving banks, pressure on the debt side may affect liquidity
September 30, 2020 02:42 CBN
2.7 trillion structured deposits, moving banks, pressure on the debt side may affect liquidity
Author: Duan Yu
The once-hot structural deposits have cooled.
Recently, the Central Bank released the RMB credit balance sheet of large, medium and small-sized Chinese banks. According to statistics, as of the end of August, the scale of structured deposits in commercial banks in my country was about 9.42 trillion yuan, which was the first time this year to drop to 10 trillion yuan. the following.
Earlier, it was reported that since June, some banks have received window guidance from supervision, requiring that the scale of structured deposits be reduced and the management of structured deposits standardized, and that it will be reduced to the scale of the beginning of the year by September 30, 2020, and at the end of the year. It was gradually reduced to two-thirds of the scale at the beginning of the year.
Today, as the "September 30" deadline is approaching, according to the central bank's statistics, the scale of structural deposits in commercial banks is already lower than the level of 9.6 trillion yuan at the beginning of this year, and this scale has dropped by approximately RMB 12.14 trillion during the year. 2.72 trillion yuan. CITIC Securities( 30.030 , -0.23 , -0.76% ) fixed-income analyst Zhang Licong told China Business News that some of the structural deposits that have fallen under pressure may "move" into public funds or directly enter the stock market.
As far as banks are concerned, structured deposits have always been regarded as a "storage weapon". With the strict control of the scale of structured deposits, the pressure on banks' liabilities has gradually increased. In order to stabilize the volatility of the inter-bank market liquidity, the supervisory authorities have recently released liquidity through methods such as over-renewal of MLF (medium-term lending facility) and reverse repurchase operations. However, in the opinion of many insiders, the debt pressure faced by small and medium-sized banks in the fourth quarter is still not small. In this regard, there are opinions that the RRR cut window has not been completely closed.
The size of structured deposits has dropped significantly
The so-called structured deposits refer to deposits embedded in financial derivative products absorbed by commercial banks, which are linked to fluctuations in interest rates, exchange rates, indices, or to the credit status of an entity, so that depositors can obtain corresponding risks while assuming certain risks. income.
“Since June, the bank has strictly controlled structured deposits. In accordance with relevant requirements, our bank reduced the scale to the level of the beginning of the year at the end of August.” A relevant person in the transaction banking department of a joint-stock bank in East China told reporters. .
From January to April this year, the scale of structured deposits achieved four consecutive months of growth, and broke through 12 trillion yuan for the first time in April. Among them, small and medium banks are the "main force" for growth. Data show that as of the end of April, the structural scale of small and medium banks was 7.91 trillion yuan, an increase of about 1.72 trillion yuan compared to the end of 2019, which is more than twice that of large banks.
However, the momentum of the rapid growth of structured deposits could not be sustained, and the regulator issued a notice in June stating that the scale growth should be strictly controlled. For example, the Beijing Banking and Insurance Regulatory Bureau issued the "Notice on Risk Warning of Structured Deposit Business" on June 12, requiring banks within its jurisdiction to take effective measures to reduce the scale of structured deposits month by month.
"Structured deposits, interest-based calculations and other products have pushed up the comprehensive cost of banks, aggravated the phenomenon of deposit relocation, and also brought about the problem of idling funds, which in a disguised form restricts the decline of deposit interest rates." Zhang Licong told reporters.
Out of the crackdown on "corporate idling arbitrage" and the consideration of reducing the cost of bank liabilities, since June, the regulatory authorities have controlled structured deposits. It is reported that at that time, the China Banking Regulatory Commission issued specific pressure drop indicators for some banks, and the window guided some large and medium-sized banks to standardize the management of structured deposits and gradually reduce the scale of structured deposits, especially some of the higher-scale joint-stock banks.
"In fact, the bank previously required sub-branches to report structural deposit requirements, but later notified that the scale of such products would be reduced, and the maturity was biased towards short-term." A branch of a joint stock bank told reporters to a public official.
Under strict supervision, the pressure drop effect of structured deposits is significant. According to the latest data released by the Central Bank, as of the end of August, the balance of structured deposits in my country's commercial banks was 9,420.258 billion yuan, a reduction of 752.393 billion yuan from the end of July, a 7% decrease from the previous month, and a drop of more than 2 trillion yuan from the April peak. . Among them, unit structural deposits fell by 1.66 trillion yuan, accounting for more than 60% of the reduction.
The decline in scale has also driven the average maximum expected yield to continue to decline. According to a research report by CITIC Securities, the average expected maximum return on structured deposits at the end of August was 3.65%, a drop of over 140 basis points (BP) from the highest value since the beginning of the year.
From the perspective of bank types, the scale of decline in small and medium-sized banks is even more pronounced, with a drop of about 1.95 trillion yuan from the peak at the beginning of the year. "This aspect reflects that the regulatory measures for stock banks are in place and strong." Zhang Licong said. This also makes some banks that rely mainly on structured deposits to maintain their assets and liabilities may face a structural reduction in their balance sheets, which will put pressure on the liquidity regulatory indicators to meet the standards.
The scale or part of the pressure drop flows to the stock market
With the gradual pressure drop of structured deposits, the focus of the industry's attention is where the pressure drop funds flow to? Generally speaking, taking into account the channel advantages and the risk appetite of structured deposit investors, banks are likely to convert some of the deposit accounts into bank wealth management investors.
However, financial products have continued to be rectified after the new asset management regulations, and some "high interest" products with mismatched characteristics have gradually faded out of the market under the pressure of supervision; at the same time, the transformation of net worth and the "disruptive exchange" have also made financial management difficult Attract investors with low risk appetite. Therefore, despite the large-scale drop in structured deposits, the issuance of bank wealth management continues to decline.
According to the statistics of Puyi Standards, in August, 309 banks issued 6,593 bank wealth management products, 15 issuing banks decreased, and product issuance decreased by 422; the yield of wealth management products also hit new lows one after another. Among them, the closed-end expected return type The average yield of RMB products was 3.75%, a decrease of 0.03 percentage points from the previous period.
In addition to bank wealth management, some analysts say that the scale of structural deposits that have fallen may flow into public funds. Data show that the scale of public offering funds continued to grow positively in August, and the scale of public offerings across the industry set a record high for the fifth time this year.
It should also be noted that with the outflow of some funds from the banking system, major banks are also seeking new sources of liabilities. Among them, interbank certificates of deposit are more favored by banks. This has also led to the recent "increasing volume and price" in the interbank certificate of deposit market. The scale has rebounded for 3 consecutive months. From the perspective of net financing, the interbank deposit certificates have basically maintained net financing after June, and have remained at a high level every week from late July to early August, and the stock of interbank certificates of deposit has reached a new high.
Many industry insiders interviewed by China Business News said that the recent pressure drop in bank structured deposits has increased the pressure on liquidity management, and banks tend to maintain stability on the debt side by issuing interbank certificates of deposit; at the same time, the "equity bond seesaw" effect is to a certain extent. It also promoted the upward trend in the issuance of certificates of deposit.
The RRR cut window is not completely closed
For example, if the balance of structural deposits at the end of the year is reduced to two-thirds of that at the beginning of the year, that is, the balance at the end of the year has fallen to about 6.4 trillion yuan, and the overall structured deposits of banks still need to be reduced by at least 3.02 trillion yuan. According to the analysis of CITIC Securities Research Report, the average monthly pressure drop from September to December is about 755.4 billion yuan. From September to December, the average monthly pressure drop required by major banks is about 296.17 billion yuan. The average monthly pressure drop for small and medium-sized banks is about 459.21 billion yuan, and the pressure drop for small and medium-sized banks is higher than that of major banks.
Coupled with the influence of factors such as heavy issuance of government bonds and slower pace of fiscal expenditures, liquidity in the banking system is under pressure. In fact, in order to alleviate the pressure on liquidity, supervision has recently taken certain measures, such as over-renewing MLF for two consecutive months in July and August, and continuing to carry out reverse repurchase operations.
In the future, Zhang Licong said that there is a greater possibility of structural directional RRR cuts. This is mainly due to the lack of accuracy of liquidity investment under the over-renewed MLF. As the total liquidity stabilizes, the efficiency will be marginally reduced, and there may even be new arbitrage space.
In contrast, “structural targeted RRR cuts will have a better effect-they can give small and medium-sized banks more low-cost, long-term funds, and are also a better guide to market expectations. After the RRR cuts, they will cooperate with OMO (Open Market Operation) or the withdrawal operation of MLF can also maintain reasonable ample liquidity at the total level." He further explained.
Wang Qing, chief macro analyst at Oriental Jincheng, also said that considering the expected growth of bank loans in the fourth quarter, net government bond financing may rise sharply year-on-year, and banks still have a heavy task of reducing structural deposits. It may be opened again.
However, Hue mentioned that with the gradual improvement of the economic situation, the central bank is unlikely to reduce the pressure on liquidity by reducing the RRR or targeted RRR, and it will mainly rely on MLF and reverse repurchase operations for adjustment. "On the whole, liquidity in the fourth quarter will ease somewhat compared to the third quarter."
https://finance.sina.com.cn/roll/2020-09-30/doc-iivhvpwy9626548.shtml
September 30, 2020 02:42 CBN
2.7 trillion structured deposits, moving banks, pressure on the debt side may affect liquidity
Author: Duan Yu
The once-hot structural deposits have cooled.
Recently, the Central Bank released the RMB credit balance sheet of large, medium and small-sized Chinese banks. According to statistics, as of the end of August, the scale of structured deposits in commercial banks in my country was about 9.42 trillion yuan, which was the first time this year to drop to 10 trillion yuan. the following.
Earlier, it was reported that since June, some banks have received window guidance from supervision, requiring that the scale of structured deposits be reduced and the management of structured deposits standardized, and that it will be reduced to the scale of the beginning of the year by September 30, 2020, and at the end of the year. It was gradually reduced to two-thirds of the scale at the beginning of the year.
Today, as the "September 30" deadline is approaching, according to the central bank's statistics, the scale of structural deposits in commercial banks is already lower than the level of 9.6 trillion yuan at the beginning of this year, and this scale has dropped by approximately RMB 12.14 trillion during the year. 2.72 trillion yuan. CITIC Securities( 30.030 , -0.23 , -0.76% ) fixed-income analyst Zhang Licong told China Business News that some of the structural deposits that have fallen under pressure may "move" into public funds or directly enter the stock market.
As far as banks are concerned, structured deposits have always been regarded as a "storage weapon". With the strict control of the scale of structured deposits, the pressure on banks' liabilities has gradually increased. In order to stabilize the volatility of the inter-bank market liquidity, the supervisory authorities have recently released liquidity through methods such as over-renewal of MLF (medium-term lending facility) and reverse repurchase operations. However, in the opinion of many insiders, the debt pressure faced by small and medium-sized banks in the fourth quarter is still not small. In this regard, there are opinions that the RRR cut window has not been completely closed.
The size of structured deposits has dropped significantly
The so-called structured deposits refer to deposits embedded in financial derivative products absorbed by commercial banks, which are linked to fluctuations in interest rates, exchange rates, indices, or to the credit status of an entity, so that depositors can obtain corresponding risks while assuming certain risks. income.
“Since June, the bank has strictly controlled structured deposits. In accordance with relevant requirements, our bank reduced the scale to the level of the beginning of the year at the end of August.” A relevant person in the transaction banking department of a joint-stock bank in East China told reporters. .
From January to April this year, the scale of structured deposits achieved four consecutive months of growth, and broke through 12 trillion yuan for the first time in April. Among them, small and medium banks are the "main force" for growth. Data show that as of the end of April, the structural scale of small and medium banks was 7.91 trillion yuan, an increase of about 1.72 trillion yuan compared to the end of 2019, which is more than twice that of large banks.
However, the momentum of the rapid growth of structured deposits could not be sustained, and the regulator issued a notice in June stating that the scale growth should be strictly controlled. For example, the Beijing Banking and Insurance Regulatory Bureau issued the "Notice on Risk Warning of Structured Deposit Business" on June 12, requiring banks within its jurisdiction to take effective measures to reduce the scale of structured deposits month by month.
"Structured deposits, interest-based calculations and other products have pushed up the comprehensive cost of banks, aggravated the phenomenon of deposit relocation, and also brought about the problem of idling funds, which in a disguised form restricts the decline of deposit interest rates." Zhang Licong told reporters.
Out of the crackdown on "corporate idling arbitrage" and the consideration of reducing the cost of bank liabilities, since June, the regulatory authorities have controlled structured deposits. It is reported that at that time, the China Banking Regulatory Commission issued specific pressure drop indicators for some banks, and the window guided some large and medium-sized banks to standardize the management of structured deposits and gradually reduce the scale of structured deposits, especially some of the higher-scale joint-stock banks.
"In fact, the bank previously required sub-branches to report structural deposit requirements, but later notified that the scale of such products would be reduced, and the maturity was biased towards short-term." A branch of a joint stock bank told reporters to a public official.
Under strict supervision, the pressure drop effect of structured deposits is significant. According to the latest data released by the Central Bank, as of the end of August, the balance of structured deposits in my country's commercial banks was 9,420.258 billion yuan, a reduction of 752.393 billion yuan from the end of July, a 7% decrease from the previous month, and a drop of more than 2 trillion yuan from the April peak. . Among them, unit structural deposits fell by 1.66 trillion yuan, accounting for more than 60% of the reduction.
The decline in scale has also driven the average maximum expected yield to continue to decline. According to a research report by CITIC Securities, the average expected maximum return on structured deposits at the end of August was 3.65%, a drop of over 140 basis points (BP) from the highest value since the beginning of the year.
From the perspective of bank types, the scale of decline in small and medium-sized banks is even more pronounced, with a drop of about 1.95 trillion yuan from the peak at the beginning of the year. "This aspect reflects that the regulatory measures for stock banks are in place and strong." Zhang Licong said. This also makes some banks that rely mainly on structured deposits to maintain their assets and liabilities may face a structural reduction in their balance sheets, which will put pressure on the liquidity regulatory indicators to meet the standards.
The scale or part of the pressure drop flows to the stock market
With the gradual pressure drop of structured deposits, the focus of the industry's attention is where the pressure drop funds flow to? Generally speaking, taking into account the channel advantages and the risk appetite of structured deposit investors, banks are likely to convert some of the deposit accounts into bank wealth management investors.
However, financial products have continued to be rectified after the new asset management regulations, and some "high interest" products with mismatched characteristics have gradually faded out of the market under the pressure of supervision; at the same time, the transformation of net worth and the "disruptive exchange" have also made financial management difficult Attract investors with low risk appetite. Therefore, despite the large-scale drop in structured deposits, the issuance of bank wealth management continues to decline.
According to the statistics of Puyi Standards, in August, 309 banks issued 6,593 bank wealth management products, 15 issuing banks decreased, and product issuance decreased by 422; the yield of wealth management products also hit new lows one after another. Among them, the closed-end expected return type The average yield of RMB products was 3.75%, a decrease of 0.03 percentage points from the previous period.
In addition to bank wealth management, some analysts say that the scale of structural deposits that have fallen may flow into public funds. Data show that the scale of public offering funds continued to grow positively in August, and the scale of public offerings across the industry set a record high for the fifth time this year.
It should also be noted that with the outflow of some funds from the banking system, major banks are also seeking new sources of liabilities. Among them, interbank certificates of deposit are more favored by banks. This has also led to the recent "increasing volume and price" in the interbank certificate of deposit market. The scale has rebounded for 3 consecutive months. From the perspective of net financing, the interbank deposit certificates have basically maintained net financing after June, and have remained at a high level every week from late July to early August, and the stock of interbank certificates of deposit has reached a new high.
Many industry insiders interviewed by China Business News said that the recent pressure drop in bank structured deposits has increased the pressure on liquidity management, and banks tend to maintain stability on the debt side by issuing interbank certificates of deposit; at the same time, the "equity bond seesaw" effect is to a certain extent. It also promoted the upward trend in the issuance of certificates of deposit.
The RRR cut window is not completely closed
For example, if the balance of structural deposits at the end of the year is reduced to two-thirds of that at the beginning of the year, that is, the balance at the end of the year has fallen to about 6.4 trillion yuan, and the overall structured deposits of banks still need to be reduced by at least 3.02 trillion yuan. According to the analysis of CITIC Securities Research Report, the average monthly pressure drop from September to December is about 755.4 billion yuan. From September to December, the average monthly pressure drop required by major banks is about 296.17 billion yuan. The average monthly pressure drop for small and medium-sized banks is about 459.21 billion yuan, and the pressure drop for small and medium-sized banks is higher than that of major banks.
Coupled with the influence of factors such as heavy issuance of government bonds and slower pace of fiscal expenditures, liquidity in the banking system is under pressure. In fact, in order to alleviate the pressure on liquidity, supervision has recently taken certain measures, such as over-renewing MLF for two consecutive months in July and August, and continuing to carry out reverse repurchase operations.
In the future, Zhang Licong said that there is a greater possibility of structural directional RRR cuts. This is mainly due to the lack of accuracy of liquidity investment under the over-renewed MLF. As the total liquidity stabilizes, the efficiency will be marginally reduced, and there may even be new arbitrage space.
In contrast, “structural targeted RRR cuts will have a better effect-they can give small and medium-sized banks more low-cost, long-term funds, and are also a better guide to market expectations. After the RRR cuts, they will cooperate with OMO (Open Market Operation) or the withdrawal operation of MLF can also maintain reasonable ample liquidity at the total level." He further explained.
Wang Qing, chief macro analyst at Oriental Jincheng, also said that considering the expected growth of bank loans in the fourth quarter, net government bond financing may rise sharply year-on-year, and banks still have a heavy task of reducing structural deposits. It may be opened again.
However, Hue mentioned that with the gradual improvement of the economic situation, the central bank is unlikely to reduce the pressure on liquidity by reducing the RRR or targeted RRR, and it will mainly rely on MLF and reverse repurchase operations for adjustment. "On the whole, liquidity in the fourth quarter will ease somewhat compared to the third quarter."
https://finance.sina.com.cn/roll/2020-09-30/doc-iivhvpwy9626548.shtml