**Chinese Regulators Crack Down on Banks’ Gift Promotions for Deposits**
Financial regulators in China have prohibited a promotional strategy employed by a lender to attract depositors through gifts, including the trendy Labubu dolls. This move highlights the intensifying competition among banks as they grapple with declining interest rates and profit margins. The Zhejiang branch of the National Financial Regulatory Administration has instructed local banks to avoid offering non-compliant incentives to draw in deposits, according to sources familiar with the situation.
This directive follows a marketing campaign by Ping An Bank Co., which had been distributing Labubu collectibles—blind box toys endorsed by celebrities like Lisa from the K-pop group Blackpink—in various cities to entice new depositors willing to commit 50,000 yuan for three months. Such promotional tactics, which often include free items like rice or small appliances, as well as digital gifts like memberships to online platforms, have been criticized for inflating costs for banks and negatively impacting their profit margins.
While Ping An Bank’s campaign gained significant traction on the Chinese social media platform Xiaohongshu, attracting considerable interest from potential savers, it also faced backlash from state media, which labeled it as “not a long-term solution.” Chinese banks are currently navigating a challenging landscape, balancing the need to attract deposits while safeguarding their margins, which are at historically low levels. Major banks recently implemented a new round of deposit rate cuts, with smaller institutions following suit, resulting in term deposit interest rates dropping to just above 1%.
The Zhejiang banking regulator has called for an immediate halt to any products associated with non-compliant deposit-gathering practices and the removal of related promotional materials. It remains uncertain whether similar guidance has been issued by other local regulatory divisions. The regulator has not yet responded to requests for comment. Ping An Bank characterized the initiative as a small-scale project initiated by a local branch and declined to provide further details.
In 2018, China established regulations prohibiting commercial banks from attracting deposits through “inappropriate means,” such as offering physical gifts or cash returns.
**FAQ**
**Q: Why are Chinese regulators banning gift promotions for bank deposits?**
A: Regulators are concerned that such promotions inflate costs for banks and undermine their profit margins, especially in a competitive environment with declining interest rates.
