Supervision stopped "manual interest supplementation" and institutions began to "chase interest for thousands of miles"

Source | 21st Century Business Herald Author | Zhou Yanyan Wu Shuang edited | Fang Haiping New Media Editor | Intern Hu Linlin

"No matter the ends of the earth, I will chase you."

This is not a romantic and beautiful declaration of love, because the story of Party A and Party B are asset management institutions and banks.

On April 8, the self-discipline mechanism for market interest rate pricing issued the "Initiative on Prohibiting the Maintenance of Competitive Order in the Deposit Market through Manual Interest Replenishment and High Interest Solicitation of Deposits" (hereinafter referred to as the "Initiative"), which not only set off waves on the bank deposit side, but also in the asset management industry. Although the "deposit relocation" effect is obvious after the gradual suspension of "manual interest supplementation", and the scale of wealth management has risen sharply, asset management institutions including bank wealth management and insurance asset management have also been taking commercial bank deposits as an important investment direction, and a considerable part of them are "manual interest supplement" deposits.

Some asset management companies told the 21st Century Business Herald reporter that since April, they have been looking for branches of large banks to discuss follow-up interest plans, and many large banks have said that the interest supplement after April 8 will no longer be paid, but in fact, the asset management institutions and large banks are still playing on the policy implementation of specific products.

Even, some asset management institutions do not hesitate to "chase interest for thousands of miles".

"In order to manually make up the interest, the company recently formed a 'recovery team', went to the branches of major banks to ask for the continuation of the previous interest payment policy, and even went to the branch in the northwest to 'chase interest' in one go." An insurance asset manager told reporters.

1. How to make up for the original?

Tracing back to the source, "manual interest supplement" was originally a supplementary tool used by the banking industry for errata, but in practice, the scope has gradually expanded, and it has become a "sharp weapon" for corporate and individual customers.

A bank financial person told reporters that although the supervision no longer attaches importance to the month-end and quarter-end indicators in the assessment of banks, the demand for large banks to sprint deposits at the end of the month, the end of the quarter, the end of the half year and the end of the year is still there, and the scale comparison complex has not weakened. Corporate customers are the targets of active competition, so in practice, they often strive for some corporate customers, including asset management institution customers, through the method of "manual interest compensation".

A person from an insurance institution told reporters that the "manual interest supplement" can generally make up 10bp to 100bp, mainly depending on the bargaining ability of asset management institutions and banks. Some bank wealth management people said that they had seen deposits with an annualized return of 1.6% being "manually repaid" to 3%, rising by as much as 140bp. Another financial person said that the deposit of the East China branch of a major bank they operated has exceeded 2.7% after the interest is paid.

Such a high return is indeed a good business for asset management institutions that are currently facing an "asset shortage". Generally speaking, the "interest supplement" is a general deposit, and the bank wealth management company's investment bank deposits belong to interbank deposits, and they cannot get this piece of "manual interest supplement", so the wealth management company has thought of a "good way" to bypass insurance asset management and negotiate a notice deposit or agreement deposit with a bank branch, or you can get "interest supplement" and share the income.

"As a rough estimate, there are 2-3 trillion dollars invested in such deposits, which is not a decimal." The above-mentioned financial management person said.

There are a variety of means of "interest catch", and many of them agree on more objective interest through drawer agreements. In addition, some "gray" methods have also been derived, such as the margin model. At the end of the month, the bank branch opened a very high price, in terms of proportion, 1 million funds rushed in before the end of the month can get 10,000 interest a day, but the interest rate is high in these two days, and it can be transferred out after one or two days, so many institutions rush in to arbitrage. In order to be afraid that the institution's funds are "unreliable", after applying for the interest rate payment, the bank even requires the institution to pay a margin in advance, such as 1 million to receive 20,000 (of course, the actual operation of the amount of funds is much larger), if the institution has no funds to come in, the bank will confiscate the deposit.

Second, the new rules of self-discipline are coming

Disorderly arbitrage behavior faces new self-discipline regulations.

On April 8, the self-discipline mechanism for market interest rate pricing issued the "Initiative", which clearly requires banks not to promise or pay supplementary interest to customers in any form that exceeds the authorized upper limit of deposit interest rates, so as to maintain the order of reasonable competition in the market, strengthen the effect of deposit interest rate adjustment, and stabilize the cost of bank liabilities.

"I heard that banks began to self-examine the problem of internal high-interest deposits three months ago, and in mid-May they will submit a preliminary rectification report to the regulators, and asset management institutions basically only learned about this news on April 8. After learning about it, I quickly contacted the bank, and the feedback I got was different. The above-mentioned wealth management company said.

Regulators have long taken note of the problem of banks collecting deposits at high interest rates. The 21st Century Business Herald has exclusively reported that at the beginning of this year, the financial regulatory department of a southern province recently required that the funds raised by insurance asset management companies in the issuance of wealth management products should be filled in the "interbank deposit" account, and should not be included in general deposits.

At a time when the financing cost of the real economy is being reduced on the loan side and the trend of fixed-term deposits is intensifying, it has become an indisputable fact that the net interest margin of commercial banks has been narrowing. According to data disclosed by the State Administration of Financial Supervision and Administration on February 21, in the fourth quarter of 2023, the net interest margin of commercial banks was 1.69%. The net interest margin for the first three quarters of 2023 was 1.74%, 1.74%, and 1.73%, respectively.

In the first quarter of this year, the information disclosed by listed banks also showed that the net interest margin fell further.

"The leader of our head office said at the beginning of the year that whoever has a high interest rate will be his enemy." A major banker told reporters that the banks themselves have long been aware that high interest rates are eroding profits.

After the release of the Initiative, at the end of April, the balance of M2 increased by 7.2% year-on-year, down 1.1 percentage points from March. For reference, in April this year, the wealth management market grew by more than 2 trillion yuan in a single month. Behind the increase and decrease is the prohibition of "manual interest supplement", "deposit moving" to financial management and other investment channels.

On May 10, the central bank released the "Report on the Implementation of China's Monetary Policy in the First Quarter of 2024", in which the central bank proposed that low-price vicious competition drags down high-efficiency enterprises, and it is also easy for some enterprises to use low-cost loan funds to purchase wealth management, deposit time deposits, or re-lend to other enterprises, bringing about the problem of idling arbitrage of corporate funds.

Zou Lan, director of the monetary policy department of the central bank, said that relevant departments will strengthen the monitoring of capital idling and improve the management assessment mechanism. In the future, with the transformation and upgrading of the economy, the recovery of effective demand, and the improvement of social expectations, the phenomenon of idle capital precipitation will also be alleviated. At present, the growth of the huge monetary aggregate may slow down, and there will be disturbances in the data, so it is not appropriate to simply compare them with the same period. However, this does not mean that the intensity of financial support for the real economy will be reduced, and efficient enterprises that really need funds will get more financing, which is a reflection of the improvement of the quality and efficiency of financial support.

Third, the game is in progress

Although depositors' funds have come to manage money, wealth management companies and a number of asset management institutions are busy "chasing interest", and they jokingly say that they are now so busy that "people are turning their backs".

A person from a wealth management company said that the original 2.5% listed interest rate, the bank promised 3% and signed an agreement, some wealth management products in the process of operation according to the amortized cost method to be priced, as a result of April the bank did not recognize 3%, only according to 2.5% to pay interest, then close to the product opened, the yield curve will suddenly fall, if it is the last rush in to buy the product customers, will intuitively see the negative returns. And the customers who leave the market early get the high income before the cancellation of the interest supplement that did not belong to them. Later customers will be very dissatisfied.

What to do? Negotiate with the bank.

"Early withdrawal and recovery of interest is a common choice for wealth managers," a city commercial bank wealth manager told reporters. As mentioned above, some insurance institutions have traveled thousands of miles to the northwest to "chase interest".

However, for wealth managers, it is not easy to recover interest. "The party that pays the interest is mainly a large state-owned bank, not a weak one; The side that collects interest is a large non-bank institution, and it is also very strong. In the process of the game, the two forces have not yet come to an end", another person from the wealth management of the city commercial bank said that some large institutional funds are entrusted to large banks, and even will tell the bank that they will take away the custody funds without making up the interest, and use the custody of funds as a bargaining chip.

The reporter received mixed feedback from the "interest call" results obtained by a number of banks or asset management institutions: some bank branches took April 8 as the boundary, and the previous call deposits were still settled according to the income of interest supplementation, and some bank branches took April 30 as the boundary, and some took May 15 as the boundary. In general, if it is a 7-day/14-day call deposit, the bank said that it cannot continue to settle according to the original interest rate. If it is a fixed deposit or agreement deposit with a long term, if the product side is far from maturity, continue to operate according to the previous contract. How to implement it depends on the results of different institutions and different branches.

A state-owned bank financial manager said that the main reason for the game between the two sides is that there is no clear operational guidelines or methods, and there is no "new and old demarcation" rules, "at the specific implementation level, the "initiative" was issued in early April, and by the end of April, everyone began to pay attention to this matter, and there is no clear plan at present. ”

The president of the East China branch of a major bank told reporters: "Recently, some insurance companies are asking banks for interest payments, but this is a self-discipline requirement of the banking industry, and banks do not want these high-cost deposits now, we can no longer give them to them, and April 30 is a deadline." ”

Fourth, what about the future?

"Now the asset management industry is basically going to compromise with the banks, and the banks are still more resolute this time." A person from a large bank wealth management company said.

How to face customers in the future?

Some financial people said that if the deposit bank does not recover the interest supplement, they may consider moving dozens of bps from the custody fee to the customer to appease the customer's emotions, if the custody fee is not enough, they may give a part of their own funds to subsidize the customer, "No way, the customer will also vote with his feet, it is really impossible to achieve the previous income, and the customer can not bear it all, and he will also subsidize." Of course, you can also risk losing customers and let the net value fluctuate with the cancellation of the interest rate, but visually there will be fewer such institutions. ”

A joint venture wealth management sub-person believes that on the basis of the original interest supplement, the benchmark yield of some wealth management products is higher, and with the decline in the yield of the bond itself, coupled with the prohibition of manual interest supplement, the income level of the asset side will drop a lot. Perhaps the benchmark yield of 2.5% may only be around 2.2% or 2.3% now.

He believes that the practice of prohibiting manual interest compensation will reduce the income of wealth management products, resulting in the outflow of funds from some products, and this trend will gradually emerge, and the impact on the wealth management industry is still relatively large. Wealth management needs to improve returns through multi-asset allocation, and equity may be a direction.

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