China banks move closer to interest rate reform

China’s big banks may win approval to issue tens of billions of yuan in negotiable certificates of deposit (NCD) as early as next month, which could help loosen controls on deposit rates, Reuters reported, citing anonymous sources. Bank of China (601988.SHA, 3988.HKG), Industrial and Commercial Bank of China (601398.SHA, 1398.HKG), Agricultural Bank of China (601288.SHA, 1288.HKG), China Construction Bank (601939.SHA, 0939.HKG) and Bank of Communications (601328.SHA, 3328.HKG) have submitted plans for NCDs to the central bank, which if approved, would allow them to access large amounts of funds at relatively stable costs. The short-term impact of NCDs on money market rates may be limited, but the move is seen as a step toward looser controls on bank deposit rates.