Since the New Year, the reform of the provincial association has accelerated, and the officials of Hubei and Guizhou have announced that they will promote the establishment of rural commercial joint banks. In January this year, the joint rural and commercial banking industry in Sichuan and Guangxi opened for business.
Since 2022, Document No. 1 has mentioned the promotion of the reform of rural credit cooperatives for three consecutive years. The "first order" of deepening the reform of rural credit cooperatives in the country will also land in Zhejiang in 2022, thus opening the curtain of the reform of provincial cooperatives. Liaoning, Henan, Shanxi, Sichuan, Guangxi and other places have completed the implementation. Among them, Sichuan Province, Guangxi Zhuang Autonomous Region, Shanxi Province, Henan Province and Zhejiang Province have all adopted the model of establishing rural commercial joint banks; Hainan Province and Liaoning Province have adopted the model of "establishing a provincial-level rural commercial bank with a unified legal person" to establish a provincial-level rural commercial bank.
Zhou Maohua, a macro researcher at the financial market department of Everbright Bank, believes that due to regional differences, local economies, market environments, corporate management and other aspects, some small and medium-sized banks also face different difficulties and challenges. In recent years, there have been many cases of mergers and acquisitions of domestic banks, which is a concrete embodiment of China's active promotion of the reform of small and medium-sized banks in some regions to reduce risks and accelerate the high-quality development of the banking industry.
Many localities are actively preparing for the reform of provincial associations
The reform of provincial associations has been further promoted, and new news has come out of the reform of provincial associations in many places in the New Year.
Recently, Hubei Province proposed for the first time to establish a Hubei Rural Commercial United Bank. According to the news of "Hubei**", the 2024 Hubei Provincial State-owned Assets and State-owned Enterprises Work Conference pointed out that Hubei Province will thoroughly implement a new round of deepening and upgrading of state-owned enterprise reform and five-year actions for high-quality development, complete the establishment of Hubei Rural Commercial United Bank, and promote provincial financial service enterprises to vigorously develop science and technology innovation finance, ecological finance, inclusive finance, chain finance, and consumer finance, and enhance the ability to serve small, medium, and micro enterprises and the "three rural" areas.
Before Hubei, the "2024 ** Work Report and Division of Key Work Responsibilities Plan" issued by the General Office of the Guizhou Provincial People's Government mentioned that the establishment of Guizhou Rural Commercial United Bank will be promoted and local legal person financial institutions will be supported to become stronger and better. The project is led by the Financial Office of the Guizhou Provincial Party Committee, and the responsible units are the Guizhou Provincial Department of Finance, the Guizhou Provincial State-owned Assets Supervision and Administration Commission, the Guizhou Provincial Taxation Bureau, the Guizhou Branch of the People's Bank of China, the Guizhou Bureau of the State Administration of Financial Regulation, the Guizhou Financial Holding Group, the Guizhou Rural Credit Cooperatives Association and other units and cities and prefectures
According to the official website of Hainan Rural Credit Bank, Hainan Rural Credit recently held a 2024 work conference, proposing that "2024 is the first year of the successful establishment of Hainan Rural Commercial Bank", and in the nine tasks required to be done well in 2024, "fully promote the smooth opening of Hainan Rural Commercial Bank" ranked first. A few days ago, Hainan Rural Credit Cooperatives also announced that the preparatory working group for the establishment of Hainan Rural Commercial Bank has completed all the work in the establishment stage of Hainan Rural Commercial Bank, and received the approval of the State Administration of Financial Supervision and Administration on December 29, 2023. In accordance with relevant laws, regulations and regulatory provisions, the first meeting of the founding meeting and shareholders' meeting of Hainan Rural Commercial Bank is tentatively scheduled to be held on March 3, 2024.
At the beginning of January 2024, the official website of the State Administration of Financial Supervision and Administration announced the approval information for the establishment of Sichuan Rural Commercial United Bank, Guangxi Rural Commercial United Bank, and Hainan Rural Commercial Bank. At present, the first two provincial-level rural commercial banks have officially opened.
According to public information, on January 6 this year, the Sichuan Rural Commercial United Bank held its founding meeting, and Sichuan became the first province in the west and the fourth province in the country to establish a rural commercial United Bank; On February 6, the opening ceremony of Guangxi Rural Commercial United Bank was held in Nanning. According to the data, the bank is the fifth provincial-level rural commercial joint bank approved for establishment in the country, and at the same time has become the first financial institution in Guangxi with a scale of "double trillion".
According to public information, in October 2021, the pilot implementation plan for deepening the reform of rural credit cooperatives in Zhejiang Province was approved by ***. In April 2022, the "first order" of deepening the reform of rural credit cooperatives in the country was officially implemented, and Zhejiang Rural Credit Cooperatives Union was transformed into Zhejiang Rural Commercial United Bank. Since then, many places have opened the prelude to the reform of provincial associations.
According to statistics from three parties, at least 12 provinces mentioned the reform of rural credit cooperatives in the 14th Five-Year Plan for financial development. In 2023, many places across the country will mention the in-depth promotion of the reform of rural credit cooperatives and the prevention and resolution of financial risks in the key work of the 2023 "** Work Report".
At present, the reform direction of the provincial association is mainly concentrated in the following four types: the establishment of a provincial rural commercial bank with a unified legal person, the restructuring into a financial holding company, the establishment of a provincial rural commercial joint bank, and the restructuring into a financial service company.
One of the most widely used forms of preparation is the formation of the Union Bank. Sichuan Province, Guangxi Zhuang Autonomous Region, Shanxi Province, Henan Province, and Zhejiang Province have all adopted this model; Hainan Province and Liaoning Province have adopted the model of "establishing a provincial-level rural commercial bank with a unified legal person" to establish a provincial-level rural commercial bank.
Ernst & Young's previous research and analysis pointed out that United Bank is a provincial-level joint-stock cooperative bank jointly funded by grassroots rural credit institutions within its jurisdiction to establish a provincial-level joint-stock cooperative bank based on equity and with a sound corporate governance structure that takes into account the functions of operation, management and service, and the reform cost is low.
After the provincial association was restructured into a joint bank, it was transformed from a 'cooperative financial institution' into a commercial financial institution, with independent corporate legal personality, and was a provincial-level joint-stock cooperative bank based on equity, with a sound corporate governance structure, taking into account the functions of operation, management and service, and its core business was to provide various financial services for the subordinate banks, including support services in terms of capital, wealth management and financial technology," said Ernst & Young.
One place, one policy, in-depth reform to reduce risks
The reform of rural credit cooperatives is one of the key tasks in the current financial field, and the first document has been deployed for several consecutive years: the first document in 2022 emphasizes that the reform of rural credit cooperatives will be accelerated, the governance mechanism of rural credit cooperatives in provinces (autonomous regions) will be improved, and risks will be resolved prudently; Document No. 1 of 2023 pointed out that the reform of rural credit cooperatives will be accelerated, and the structural restructuring of village and township banks will be promoted; In 2024, the first document proposes to promote the reform of rural credit cooperatives by province and classification.
On January 30 this year, the State Administration of Financial Supervision held a 2024 work conference to summarize the work in 2023 and deploy key tasks in 2024.
The meeting pointed out that since the establishment of the State Administration of Financial Regulation, "effectively prevent and resolve risks in key areas, accelerate the pace of reform of small and medium-sized financial institutions, and promote the reform of rural credit cooperatives in an orderly manner." When deploying the annual key tasks and objectives for 2024, the State Administration of Financial Supervision and Administration mentioned that "we will make every effort to promote the reform of small and medium-sized financial institutions to reduce risks, grasp the timeliness and efficiency, and carry out work in a planned and step-by-step manner." ”
The column article on "In-depth Study and Implementation of the Spirit of the Financial Work Conference to Promote the High-quality Development of Rural Small and Medium-sized Banks" previously issued by the Rural Banking Supervision Department of the State Financial Supervision and Administration also pointed out that it is necessary to "accelerate the reform of the management system of rural credit cooperatives", support and cooperate with the provincial party committee to promote the reform of rural credit cooperatives with "one province and one policy", and restructure the provincial association into a financial enterprise with clear property rights, clear rights and responsibilities, and standardized management, clarify the functional positioning, standardize the performance of duties, and enhance the economic ties between the two levels of legal persons. Efforts should be made to build a rural credit cooperative system that combines unified and decentralized, multi-level operation, complementary functions and effective governance.
At the end of last year, the People's Bank of China (PBoC) released the China Financial Stability Report (2023), which explained in detail the need for rural credit cooperatives to further deepen reform. According to the report, at present, the risks of rural credit cooperatives across the country are generally controllable, but affected by historical, cyclical, institutional and other factors, rural credit cooperatives have also accumulated some problems and risks: First, the function of provincial cooperatives is not clear. Under the current system, the boundaries of industry management responsibilities of provincial-level cooperatives are blurred, and the phenomena of offside, absence and inadequacy coexist in the performance of duties, and the problems of "responsibility, power and interest" are more prominent, and even directly interfere with the operational autonomy of rural credit cooperatives; Second, corporate governance is relatively weak. Although the rural credit cooperatives have generally established a modern corporate governance structure, the equity structure of some institutions is unreasonable, and an effective governance mechanism of checks and balances has not yet been established. The third is to deviate from the main business of "supporting agriculture and supporting small enterprises". In order to achieve rapid growth in scale, a small number of rural credit cooperatives have issued large non-agricultural loans, concentrated funds to "build large households", excessively carried out capital market business, and detached themselves from the market positioning of serving the "three rural" areas.
In terms of the practical exploration of the reform of rural credit cooperatives, the report revealed that the relevant departments focused on "one province and one policy" to promote the reform of the management system and deepen the reform of city and county banks.
Ernst & Young's analysis pointed out that considering the different levels of economic and social development in various provinces and the great differences in the development of the rural credit system, the future reform of provincial associations still needs to be selected by each province according to the actual situation and local conditions.
Zhou Maohua, a macro researcher at the Financial Market Department of Everbright Bank, said that in recent years, there have been many cases of mergers and acquisitions of domestic banks, which is a concrete embodiment of China's active promotion of the reform of small and medium-sized banks in some regions and the acceleration of the high-quality development of the banking industry. Due to the market-oriented reform of interest rates, intensified market competition, financial disintermediation, regional economic fluctuations, etc., the operating pressure of some small and medium-sized banks with insufficient operation and risk control level has increased significantly. At the same time, it is also one of the important ways for a small number of small and medium-sized banks in the region to reform and reduce risks.
Generally speaking, small and medium-sized banks can help improve regional market concentration, reduce homogeneous competition among peers, and enhance market bargaining power through mergers and restructuring. Significantly reduce operating costs, optimize internal business structure, and improve comprehensive innovation capabilities and operating efficiency; At the same time, it will prevent and resolve the potential risks of individual institutions, straighten out the equity structure, improve internal governance, give full play to the brand effect of banks, enhance market competitiveness and talent attraction, and better serve the development of the regional real economy," Zhou Maohua said.
Wang Xinyu text.