Commercial banks have always been the focus of market attention, and as an important financial institution, banks have been relatively stable, but just recently, some media found that there were 40 small and medium-sized banks in just 7 days.
1. There are 40 fewer small and medium-sized banks in 7 days
According to a report by the Securities Times, the website of the Inner Mongolia Supervision Bureau of the State Administration of Financial Supervision and Administration issued an approval for the dissolution of Zhenglanqi Huize Village Bank.
According to the statistics of the Securities Times, at least 40 small and medium-sized rural banks have been absorbed, merged or dissolved in seven days, and the reshuffle of small and medium-sized rural banks has accelerated. In addition, Liaoning Rural Commercial Bank was approved to absorb and merge 36 rural small and medium-sized banking institutions; Minsheng Bank acquired 1 village bank and set up a branch; Dongguan Rural Commercial Bank absorbed and merged two village and township banks.
At the end of May, the Party Branch of the Department of Supervision of Rural Small and Medium-sized Banks of the State Administration of Financial Supervision issued a signed article expounding the latest ideas for promoting the reform of rural small and medium-sized banks, namely, "promoting the merger and reorganization of rural small and medium-sized banks, reducing quantity and improving quality", "reducing the number and level of rural small and medium-sized banks, and strengthening centralized and unified management".
Industry insiders said that this means that the speed of acquisition, merger and exit of small and medium-sized rural banks will be further accelerated this year.
Judging from the list of legal persons of banking financial institutions recently disclosed by the State Administration of Financial Regulation, by the end of 2023, there will be 4,490 legal persons of banking financial institutions in mainland China. Compared with 4,567 in 2022 and 4,602 in 2021, the number of legal persons of banking financial institutions has shrunk for two consecutive years, and the number of legal persons in 2023 has decreased by 77.
The Securities Times reporter checked the financial license information of the State Administration of Financial Supervision and Administration and found that a total of 9 village and township banks, including Liaoning Qianshan Jinquan Village Bank and Zhaotong Zhaoyang Fudian Village Bank, will withdraw in 2023.
2. What should we think of the merger tide of small banks?
In the financial sector, the merger and restructuring of banks has always been the focus of market attention. What should we look at the wave of mergers of small banks?
First of all, in recent years, with the rapid development of China's economy and the increasing openness of the financial market, the diversification of the financial system has become an unstoppable trend. In this process, many village and township banks and small commercial banks have sprung up like mushrooms after a rain and become an indispensable part of the financial market. The original intention of the establishment of these banks is to fill the gap of traditional financial services, especially the financing difficulties of rural areas and small and micro enterprises, and promote local economic development through sinking services. Driven by the policy support of the financial regulatory authorities and the market demand, the number of banking financial institutions has surged, forming a huge and multi-level financial network.
Second, although small banks have natural advantages in serving the local economy, they generally face the problems of high operating costs and weak risk resistance. Due to their small size, it is difficult for them to reduce unit costs through economies of scale, and at the same time, there are great challenges in asset quality and risk management. Especially in recent years, with the slowdown of macroeconomic growth and the tightening of financial supervision, the non-performing loan ratio of some small banks has increased significantly, and even local credit risk events have emerged, such as the crisis of village and township banks, which not only affects the stability of individual banks, but also poses a threat to the security of the entire financial system.
Third, in the face of the above challenges, the merger and restructuring of small and medium-sized banks has become a trend. Through the merger, multiple smaller financial institutions with weak risk control capabilities can be integrated to form a larger entity, thereby improving the overall operational efficiency and risk resilience. In addition, the combined bank can better serve local economic development through resource sharing and optimal allocation, and also help improve the competitiveness and service level of the entire banking industry.
Fourth, the current trend of mergers and reorganizations is not only a correction to the blind expansion of the past, but also an adaptation to the current economic environment and financial regulatory requirements. Under the new economic normal, the financial industry is facing unprecedented changes, with stricter regulation, intensified competition, and technology-driven factors forcing banks to transform and upgrade. Merger and restructuring is undoubtedly one of the effective means to control risks and improve competitiveness, and it is expected that this trend will continue in the future, and the market reshuffle will further accelerate.
For commercial banks, economies of scale are becoming increasingly important. Sufficient scale not only means stronger market influence, but also the basis for obtaining capital, diversifying risks, and improving innovation capabilities. Therefore, in the future, the banking industry will be more concentrated, forming an ecology in which a small number of large banks coexist with many specialized and specialized banks. At the same time, the regulatory level will continue to guide and support reasonable and orderly mergers and reorganizations to ensure the healthy and stable development of the financial market.
Therefore, the disappearance of 40 medium-sized banks in 7 days reflects the current survival pressure faced by small and medium-sized banks and the inevitable result of market choice. Through mergers and reorganizations, it can not only effectively solve the survival problems of small banks, but also improve the competitiveness and service quality of the entire banking industry, which is of great significance to promoting the healthy development of the financial market.