The behind-the-scenes reason for the "late" approval of interbank certificate of deposit quotas: it may be related to coordinated management with bank financial bond quotas

Interface News reporter | Yang Zhijin

Interface News editor | Wang Shu

As of March 24, this year’s commercial bank negotiated CD (certificate of deposit) filing quotas have still not been announced. Normally, in January and February, each bank would publish its issuance plan for the negotiated CDs for the year and then disclose the year’s filing quota for negotiated CDs.

Regarding this anomaly, an industry insider interviewed by Interface News analyzed that the filing method for negotiated CD quotas may be adjusted, possibly with unified management alongside financial bonds such as subordinated capital bonds and perpetual bonds, since the two share similarities such as balance management. In the first quarter of this year, net financing for both commercial bank negotiated CDs and financial bonds fell below normal levels, which also indicates that neither of their quotas has been approved this year.

Generally disclosed to the public in January–February

Negotiated CDs constitute a liability of commercial banks. But unlike the “passive absorption” logic of traditional deposits, negotiated CDs give banks the initiative to issue on the liability side. Therefore, negotiated CDs are an instrument of banks’ active liabilities.

According to the Interim Measures for the Administration of Negotiated CDs formulated by the People’s Bank of China, the filing quota for negotiated CD issuance is subject to balance management. At any point during the issuer’s annual period, the balance of negotiated CDs may not exceed the filing quota for that year.

The aforementioned measures also state that before the first negotiated CD issuance each year, banks should disclose the issuance plan for that year to the market. If major or substantive changes occur during that year, the issuer should promptly re-disclose the updated issuance plan.

Based on recent practice, commercial banks generally formulate the negotiated CD issuance plan at the end of the previous year or at the beginning of the current year (i.e., completing the filing), and then disclose the negotiated CD issuance quotas to the public in January or February of the current year.

Taking Industrial and Commercial Bank of China as an example, the bank’s 2023 negotiated CD issuance plan was disclosed to the public on February 3, 2023. The total approved issuance quota was 784.8 billion yuan (RMB), with the sign-off date being December 27, 2022, showing that it had already completed quota formulation and filing by the end of 2022.

Similarly, the 2025 negotiated CD issuance plan disclosed by China Merchants Bank on February 28, 2025 shows that the bank’s total negotiated CD issuance quota for 2025 is RMB 600.0 billion. The sign-off date is February 26, meaning that China Merchants Bank’s 2025 negotiated CD issuance plan was formulated and completed for filing two days earlier.

Interface News reporter creates charts based on enterprise early-warning service tables

Interface News reporter’s review of data from enterprise early-warning service tables found that in 2025, the filing quotas for commercial bank negotiated CDs amounted to 33 trillion yuan. The actual negotiated CD balances at year-end were 19.7 trillion yuan. This corresponds to a negotiated CD usage rate (CD balance/CD filing quota) of 60%, down 10 percentage points from the previous year. In particular, the usage rate for state-owned banks fell more significantly; earlier, at the end of 2024 when quotas were tight, state-owned banks even rarely increased their filing quotas.

Regarding the reasons for the decline in the 2025 negotiated CD usage rate, Lin Yingqi, director of research and a banking industry analyst at CICC Research Department, told Interface News that, first, the central bank increased the intensity of liquidity injections through tools such as MLF and outright reverse repos, so liquidity conditions were relatively abundant; second, due to policies on repaying enterprises’ overdue receivables and economic recovery, corporate and household cash flow improved, easing pressure on banks at the liability side; third, the capital market was active, and funds flowed into the stock market, forming non-bank deposits for big banks.

“From the liability side, last year big banks’ liability-side structure improved noticeably, reflected in the rebound in the growth rate of low-cost demand deposits and the decline in the growth rate of higher-cost time deposits, leading to an overall reduction in liability costs.” Lin Yingqi said to Interface News.

May be related to unified management of financial bonds

Because negotiated CDs have a large issuance scale and significantly affect market liquidity, the filing quotas for negotiated CDs have also drawn close attention from the market. According to the data provider Tonghuashun iFinD, in 2025 the issuance scale of negotiated CDs reached 33.8 trillion yuan, accounting for 38% of the issuance scale of all types of bonds in the bond market.

However, as of March 24, commercial banks—including state-owned banks and joint-stock banks—have not disclosed their 2026 negotiated CD issuance plans, nor have they disclosed the quotas for that year. Multiple market participants interviewed by Interface News believe the reason may be that the filing quota mechanism for negotiated CDs may be adjusted, or unified management with financial bonds may be implemented.

A research report by Tienfeng Securities (rights protection) states that it cannot be ruled out that this year the negotiated CD filing quota mechanism will undergo moderate reform—for example, merging the negotiated CD filing quotas with bond-issuing quotas, and setting up separate quotas for capital replenishment instruments and negotiated CD sub-items.

“On the one hand, last year the usage rate of negotiated CD quotas was relatively low. On the other hand, this year the issuance progress of negotiated CDs and bank financial bonds is slower, and net financing is negative. This suggests that both may be affected by the same factors, and the quotas for negotiated CDs and the issuance quotas for financial bonds are very likely to be merged and managed together, and reviewed together.” a chief analyst for the banking industry at a top securities firm said to Interface News.

According to Tonghuashun iFinD data, from Q1 2021 to Q1 2025, net financing for commercial bank negotiated CDs and financial bonds was basically positive. But this year’s Q1 (as of March 24), both were negative, at -129.7 billion yuan and -136.3 billion yuan respectively. This is because the新增 (additional) issuance scale of negotiated CDs and financial bonds was small, but the maturing scale was large.

Interface News reporter charts based on Tonghuashun iFinD data

“Mainly because regulators have not approved new bank financial bond quotas, leading to the issuance scale of bank financial bonds being far below normal.” a chief fixed-income analyst at a large securities firm in Shanghai said to Interface News.

Commercial bank financial bonds include special financial bonds (such as green financial bonds and tech innovation financial bonds), TLAC non-capital debt instruments, subordinated capital bonds, perpetual bonds, and other types, among which the latter two are the main ones.

According to Interface News’ review, the issuance quotas for subordinated capital bonds and perpetual bonds are approved separately by the People’s Bank of China and the National Financial Regulatory Administration, but there is no fixed approval time or disclosure time. Generally, the effective period for approved quotas of subordinated capital bonds and perpetual bonds is 24 months. During this period, banks can independently decide the issuance timing, batches, and scale.

“Based on issuance in the past, when commercial banks obtain the approval letters for subordinated capital bonds and perpetual bonds, they usually issue the quotas within a year. They don’t really wait until the two-year validity period is about to end before issuing the remaining amount. In essence, the actual effective period of the quota is also one year. This is similar to negotiated CDs, and merging and jointly managing the quotas for both also has a foundation.” the aforementioned chief fixed-income analyst at the large securities firm in Shanghai told Interface News.

The aforementioned chief banking-industry analyst at a top securities firm told Interface News that unified management of financial bonds—where negotiated CD quotas are issued together and managed in a coordinated way—helps commercial banks, at the micro level, to plan the year’s capital replenishment and the overall pool of active liabilities, better match the pace of asset deployment, and improve banks’ asset-liability management efficiency.

“As a liquidity regulation tool, there is still an objective demand for negotiated CDs, but it may be not as large as before, because banks’ deposit-to-loan spread problem (deposit growth is fast but loan growth is slow) is still quite serious now.” an unnamed banking industry expert told Interface News.

According to data from the People’s Bank of China, at the end of February this year, the growth rate of deposits at financial institutions was 8.7%, which was 2.8 percentage points higher than the loan growth rate. Looking over a longer period, since April last year, the growth rate of deposits at financial institutions has been consistently higher than the loan growth rate, indicating that there is insufficient demand for loans among financial institutions. To some extent, this may reduce commercial banks’ demand for negotiated CDs, subordinated capital bonds, and perpetual bonds.