Village and township banks, which account for one-third of the total number of banking institutions, are undergoing new changes.
Recently, the official website of the State Administration of Financial Supervision and Administration disclosed an announcement - approving the approval of Huaxia Bank's acquisition of Beijing Daxing Huaxia Village Bank Co., Ltd. to set up a branch. This means that the village bank under Huaxia Bank will be transformed from an independent subsidiary into a sub-branch.
Even though there have been several similar cases in urban rural commercial banks before, it is worth noting thatThis is the first time this year that a joint-stock bank has been removed from the market, absorbing and merging its village and township banks and turning them into their own branches, and the scope of integration and reorganization of village and township banks has been further expanded.
What is the difference between before and after the transformation for this type of bank?Will more banks follow suit in the future?"Discovery Finance" learned from many industry insiders that in the context of the regulatory authorities strengthening supervision and speeding up the risk disposal of village and township banks, a predictable trend is that the number of cases of reform and restructuring of village and township banks will increase significantly in the future.
The joint-stock bank's "village reform" is now a new action
According to the announcement, the Beijing Regulatory Bureau agreed that Huaxia Bank would acquire 10% of the equity of Beijing Daxing Huaxia Village Bank held by Beijing Yizhuang International Investment and Development, and 10% of the equity of Beijing Daxing Huaxia Village Bank held by Beijing Biomedical Industry Base Development.
After the transfer of shares, Huaxia Bank holds 100% of the equity of the village bank in total, and undertakes all its assets, liabilities, rights and obligations.
The regulatory authorities also stated that they agreed with Huaxia Bank to set up Huaxia Bank Beijing Kangzhuang Road Branch and Beijing Pangezhuang Branch, and asked Huaxia Bank to supervise Beijing Daxing Huaxia Village Bank to handle the dissolution of legal entities and other related matters in accordance with regulations. After the completion of the preparatory work for the establishment of the two sub-branches, they applied to the Beijing Supervision Bureau for approval of the opening of the sub-branches.
Beijing Daxing Huaxia Rural Bank is the first rural bank initiated by Huaxia Bank, which opened in September 2010 with a registered capital of 12.5 billion yuan, previously Huaxia Bank held 80% of the shares.
After more than ten years, behind the bank's "transformation" into a sub-branch is its obvious decline in operating performance. According to Huaxia Bank's 2023 semi-annual report, Beijing Daxing Huaxia Village Bank's revenue in the first half of the year was 968850,000 yuan, with a net profit of 7050,000 yuan, down 28 percent year-on-year34% and 8677%, with a significant decline in profitability.
At the same time, the assets of Beijing Daxing Huaxia Village Bank shrank simultaneously, and as of the end of June, the bank's total assets were 66.3 billion yuan, down 40% from the same period last year;Total Deposits49.6 billion yuan, a year-on-year decrease of 1634%；The total amount of the loan is 40.3 billion yuan, a year-on-year decrease of 4012%。
"Village to expenditure" is not an isolated case
Closer connection to the primary initiating row
In addition to Beijing Daxing Huaxia Rural Bank, "Discovery Finance" found that in the past two years, a number of village and township banks have "transformed" into branches of the main initiating bank, and a number of rural banks have also obtained equity increases from the initiating bank, showing a closer connection with the main initiating bank as a whole.
For example, in 2023, Harbin Bank's acquisition of Yanshou Rongxing Village Bank and Bayan Rongxing Village Bank and its transformation into branches of Harbin Bank were approvedFudian Bank acquired Zhaotong Zhaoyang Fudian Village Bank, and set up 7 sub-branches of Fudian Bank, including Zhaotong Hailou Road Branch of Fudian Bank and Zhaotong Longquan Branch of Fudian BankBank of Liuzhou's acquisition of Guangxi Rongshui Liuyin Village Bank and the establishment of six branches, including Rongshui Branch of Bank of Liuzhou and Rongshui Nationality Branch of Bank of Liuzhou, were approved.
In 2022, Zhangjiakou Bank absorbed and merged Wuqiang Jiayin Village Bank and Fucheng Jiayin Village Bank, and established Wuqiang Branch and Fucheng Branch.
"Discovery Finance" learned from industry insiders that after the village and township banks are changed to branches, it will be convenient for the supervision and management of the main initiating bank. This is because from the perspective of bank management, the management of branches belongs to internal management, while before the adjustment, the management of village and township banks is more inclined to the management of subsidiaries and belongs to the corporate governance of shareholders, and there is a clear difference between the two.
After the "village reform", the main initiating bank will be more efficient in management, and the requirements for it will be higher and stricter.
Some people in the industry mentioned that the advantage of "village to expenditure" is that the corporate culture and management model are relatively close, and the business integration and role transformation of village and township banks will be relatively fast after the transformation of village and township banks into branches in the future, and the operating costs can be effectively reduced.
In addition, for the main initiating bank, it is also equivalent to an additional business license for operating in other places, and if the main initiating bank does not set up other branches in the location of the village or township bank, the addition of the village or township bank is also conducive to its expansion of new business.
The reform and restructuring of small and medium-sized banks has been steadily promoted
The frequent occurrence of "village reform and expenditure" has also reduced the current operational difficulties faced by village and township banks. According to regulatory data, as of the end of June this year, the number of village and township banks in the country has reached 1,642, accounting for about 36% of the total number of banking financial institutions in the country.
The central bank's financial institution rating results also show that village and township banks are one of the riskier financial institutions. As of the end of 2022, the number of high-risk institutions was 118, an increase of 15 year-on-year, accounting for 31 of all high-risk institutions4%。
Therefore, resolving the risks of village and township banks and even other small and medium-sized banks has become the focus of the current industry. In 2021, the regulatory authorities issued the Notice on Further Promoting the Reform and Restructuring of Rural Banks to Resolve Risks, proposing to support the main initiating banks in replenishing capital to rural banks and assisting in the disposal of non-performing loans, promoting the reform and restructuring of rural banks in an appropriate and orderly manner, and guiding them to continuously enhance their risk resilience and achieve sustainable and healthy development.
The above-mentioned circular also proposes a variety of models, such as the main initiating bank increasing capital and shares in the high-risk village or township bank initiated and established, the village or township bank absorbing and merging the high-risk village and township bank in the county (district) or neighboring counties (districts) in the province and transforming it into a sub-branch, and introducing local enterprises and non-bank financial institutions to participate in risk resolution.
This year, the regulatory direction is clearer. After the Politburo meeting in July proposed to "steadily promote the reform of high-risk small and medium-sized financial institutions", the first financial work conference held not long ago further clarified that it is necessary to "deal with the risks of small and medium-sized financial institutions in a timely manner". Subsequently, when learning the spirit of the Xi Financial Work Conference, the central bank and the State Administration of Financial Supervision emphasized the need to resolve the risks of small and medium-sized financial institutions and regarded it as one of the important tasks.
On the whole, at present, the absorption and merger of the main initiating bank has become an important path for the reform and reorganization of village and township banks. According to some analysts, the absorption and merger of village and township banks by the main initiating bank can effectively protect the rights and interests of depositors and avoid risk contagionAt the same time, the main initiating bank can make use of its own advantages to rationalize the business of the original village and township bank as soon as possible, so that it can quickly integrate into the business operation, optimize and integrate its own regional resources, and promote the village and township bank to improve its operation and risk control capabilities.
The consensus in the industry also lies in the fact that with the advancement of risk mitigation reform and restructuring, the number of mergers and restructurings of small and medium-sized banks, including village and township banks, will increase in the future.