Will the consolidation of bank certificates of deposit and financial bonds be managed uniformly? What is the potential impact on the market?

How can AI and regulatory consolidation optimize banks’ liability structures?

21st Century Business Herald Reporter Yu Jixin

As the end of March approaches, many industry insiders have noticed that the filing quota for commercial bank interbank certificates of deposit (CDs) in 2026 has yet to be announced. Typically, banks release their issuance plans for the year between January and February.

There are market rumors that the quota filing approach for interbank CDs may be adjusted, potentially integrating management with secondary capital bonds, perpetual bonds, and other financial debt instruments. In response, the 21st Century Business Herald interviewed several professionals.

A senior employee at a state-owned major bank told reporters that the main reason for the delayed filing quota for 2026 interbank CDs might be the regulatory possibility of managing interbank CDs together with secondary capital bonds, perpetual bonds, and other financial debts. He sees this as a signal from policymakers to optimize the coordination between banks’ liabilities and capital replenishment tools, aiming to prevent over-reliance on a single instrument.

“Previously, some banks’ perpetual and CD departments were part of a larger unit. With the central bank’s current efforts to support liquidity and the declining role of CDs as liabilities, there has been a natural push for consolidation,” said Wang Menghan, a fixed-income analyst at Caitong Securities Research Institute. This also objectively explains why most banks disclosed their issuance plans later than in previous years.

She believes that if these instruments are merged, future issuance of related products might be subject to ‘total volume control,’ guiding banks to reduce dependence on interbank CDs and shift toward long-term capital bonds for stable liabilities.

As a proactive liability tool for banks, interbank CDs are managed under a quota system according to the People’s Bank of China’s “Interbank CD Management Interim Measures.” The issuance quota is managed based on the outstanding balance, and the balance at any point within the year cannot exceed the approved quota.

Looking back at last year, data from Enterprise Early Warning System shows that most banks announced their interbank CD filing in mid to late February or early March. Major institutions like Bank of China, ICBC, ABC, CCB, Bank of Communications, CITIC Bank, Industrial Bank, Shanghai Pudong Development Bank, China Everbright Bank, China Merchants Bank, Ping An Bank, Jiangsu Bank, and Beijing Bank mostly completed disclosures between February 17 and February 28.

In terms of scale, among the top 15 banks by interbank CD filing quota last year, four state-owned giants had quotas exceeding 1.9 trillion yuan, with ICBC’s at 2.2 trillion yuan—the highest. ABC, CCB, and Bank of Communications also exceeded 1.9 trillion yuan. Other joint-stock and city commercial banks’ quotas ranged from 600 billion to 1.5 trillion yuan.

Notably, actual utilization of these quotas last year was generally low, with several large banks using less than 60%, such as Ping An Bank (40.76%), Postal Savings Bank (12.61%), and China Merchants Bank (32.33%). Conversely, some banks used their quotas more efficiently, with four exceeding 80% utilization: ABC (84.79%), Shanghai Pudong Development Bank (84.03%), Everbright Bank (93.65%), and Industrial Bank (89.10%). This indicates strong funding needs and effective quota management. Overall, the issuance of interbank CDs in 2025 showed a pattern of ample quotas but varied utilization.

Industry experts believe that in the first quarter of 2026, both the net financing of commercial bank interbank CDs and financial bonds fell below normal levels, indicating that their quotas have not been approved this year.

According to data from Enterprise Early Warning System, as of the end of March, the interbank CD market has shown a continuous trend of “net outflows and shrinking stock” over the past year. Monthly issuance has generally been small, while maturities remain high, leading to a net financing deficit in 10 of the past 13 months. Only in March and during some months in 2025 (March, April-May, October) did net financing briefly turn positive, but the scale was limited. Structurally, from April 2025 to March 2026, average monthly issuance was about 2.8 trillion yuan, while average monthly maturities exceeded 2.9 trillion yuan, creating a “funding gap” in most months. Since the beginning of this year, monthly issuance has ranged from 1.6 trillion to 2.8 trillion yuan, but maturities have been larger, resulting in three consecutive months of negative net financing in the first quarter, with a cumulative shortfall of over 1.3 trillion yuan.

This trend reflects banks’ weak willingness to actively issue interbank CDs, with overall funding demand relatively subdued. The reliance on this short-term liability instrument has decreased, influenced by policies to reduce interbank liabilities, optimize liability structures, and the gradual recovery of deposits and cautious liquidity management. Overall, the market continues to feature small issuance scales, large maturity pressures, and persistent net outflows, indicating a cautious bank liability appetite.

Data source: Enterprise Early Warning System, compiled by 21st Century Business Herald; as of March 26.

Luo Feipeng, a researcher at Postal Savings Bank of China, pointed out that the low utilization rate of CD quotas in 2025 and the negative net financing for both CDs and secondary bonds at the start of 2026 indicate weak active liability demand and ample market liquidity. This also signals regulatory efforts to strengthen banks’ liability structure management, prevent interbank business risks, and guide funds toward real economy investments.

Regarding market opinions on adjusting the CD filing quota, Liu Chengxiang, Chief Analyst of Banking at Kaiyuan Securities, explained that while it is not yet clear whether this will be integrated into the management of financial bonds, if the rumor proves true, it may reflect a three-layer regulatory approach: (1) shifting from separate quota management to “total and structural dual control,” with interbank CDs, financial bonds, and secondary bonds sharing a combined quota to prevent banks from over-leveraging through “substitution”; (2) guiding liability focus toward core deposits, gradually transforming interbank CDs from a leverage tool into a liquidity management and gap-filling instrument; (3) preventing maturity mismatches by strengthening liquidity and interest rate risk management, as interbank CDs are short-term (usually within one year), while commercial bank bonds and secondary bonds tend to have longer maturities. If managed collectively, regulators may aim to encourage banks to use longer-term, more stable liabilities to replace some short-term interbank CDs, reducing maturity mismatch risks.

If this adjustment is implemented, how might issuance patterns and market impacts evolve? Luo Feipeng believes that new filing quotas in March-April could be introduced, with some tightening of interbank CD sub-limits. The issuance pace of secondary capital bonds and perpetual bonds may accelerate, forming a coordinated and complementary issuance pattern with CDs. Meanwhile, the central interest rate for CDs could decline, lowering banks’ liability costs and stabilizing net interest margins.

Liu Chengxiang added that, given the current phase of rising loan-deposit growth differentials, the need for banks to issue interbank CDs to fill funding gaps is limited. If the management is integrated, future issuance of various products is expected to be characterized by “total volume restrictions, structural differentiation, and extended maturities.” Quota reductions for interbank CDs would lead banks to avoid using capital replenishment quotas unless necessary.

He also noted that sharing a “wholesale financing total limit” between interbank CDs and secondary bonds would make banks more cautious in their early-year issuance plans. Smaller city and rural commercial banks, which rely heavily on interbank CDs, would face increased liquidity management pressure if quotas tighten, possibly forcing them to issue at higher costs at key points like quarter-ends. The issuance pace might shift from “single annual filing” to “on-demand application and dynamic adjustment,” increasing market uncertainty about CD supply and potentially causing interest rate volatility.

In the short term, banks may “rush” to issue CDs within limited quotas to ensure liquidity safety, causing slight supply shocks. In the longer term, supply-demand mismatches are likely to persist, with banks moderating issuance volumes. Meanwhile, the scale of wealth management products is expected to continue strong growth in 2026, and increased self-discipline and net value stability requirements may shift some deposit allocations back to interbank CDs, pushing their rates downward. Therefore, the space for a phased decline in CD rates is limited, but small decreases within the year are possible.

Regarding bank stocks, large banks with solid liability bases and refined liquidity management are favored. Smaller banks may be forced to supplement high-cost liabilities passively, increasing their cost rigidity.

Wang Menghan told reporters that, in terms of bonds, easing supply pressures could allow CD yields to continue declining, while the issuance pace of capital bonds might stabilize, supporting a prudent liability structure for banks. Amid asset scarcity, widening spreads are less of a concern, but liquidity is expected to improve, which is overall positive for both CDs and capital bonds.