Branches of three state-owned commercial banks have been told not to negotiate deposit deals with Tianhong Asset Management, Alibaba’s partner in the Yu’E Bao money market fund, news website eeo.com.cn reported Wednesday. State-owned banks are understood to be preparing a counterattack on Yu’E Bao, which has drained retail deposits away from traditional lenders since its launch last year. Some banks accuse the fund of diverting deposits that would have originally gone directly to them at rates of about 0.35 percent for demand deposits and 3.75 percent for two-year fixed deposits rather than the 6 percent or so paid to Yu’E Bao. Some members of the China Banking Association are lobbying for funds collected through online channels like Yu’E Bao to be regarded as general deposits, and not interbank deposits, the report said.
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