Chinese banks have stepped up efforts to boost synergy while striving to reinvigorate the sagging mortgage loan business in order to meet tougher competition.

The moves come at a time when a raft of Chinese mainland lenders are listing overseas to bolster profits and improve efficiency before the sector fully opens to foreign players late this year, analysts said.

The Shandong and Gansu branches of China Construction Bank said last month they would slash deposit rates on small-denomination demand saving accounts from 0.72 percent to 0.01 percent.

Each account with a balance of less than 300 yuan (US$37.5) will be paid the new rate while the branches will also charge account holders a management fee of 3 yuan each quarter.

Under the rules on China's mainland, commercial lenders are assigned upper limits on interest rates by the central bank, but gives banks the flexibility to set the low end.

Usually Chinese banks provided the maximum allowable interest, hoping to obtain abundant capital for lending to companies. But things might change as the country's household savings hit a record US$1.9 trillion and the government has moved to curb an investment boom, analysts said.

"Banks are not as desperate as before to seek growth through deposits," said Wu Ke, a Zhongtian Investment Consulting Co. "Costs are one concern and lenders decided to move on that aspect."

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