Zheng Quan Shi Bao·2025-07-09 18:37Core Insights - The reform and risk mitigation of small and medium-sized financial institutions, particularly village and town banks, are accelerating as of mid-2025, with a significant increase in the number of bank dissolutions compared to previous years [2][4] - The primary strategy for risk resolution in rural small and medium-sized financial institutions is through mergers and acquisitions, focusing on "reducing quantity and improving quality" [2][9] Summary by Category Mergers and Acquisitions - As of July 9, 2025, 84 village banks have been officially approved for dissolution, a notable increase compared to 98 in 2024 and 9 in 2023 [4] - Inner Mongolia leads the country with 15 village banks approved for dissolution in the first half of the year, followed by Shandong with 14 and Jiangsu with 5 [3] - The majority of dissolved village banks are being absorbed by local city commercial banks or rural commercial banks, often being restructured as branches [5][6] Regulatory Environment - The National Financial Regulatory Administration has prioritized accelerating the reform and risk mitigation of small and medium-sized financial institutions as a key regulatory task [2] - The first instances of cross-province mergers and acquisitions of village banks have occurred, indicating a potential shift in regulatory approaches [6][7] Involvement of Major Banks - For the first time, state-owned banks have entered the village bank merger and restructuring arena, with the Industrial and Commercial Bank of China acquiring a village bank in Chongqing [8] - Despite this involvement, other major banks are unlikely to replicate this model due to their limited ownership of village banks [8][9] Future Outlook - Experts predict that the restructuring of small and medium-sized banks will continue to accelerate, leading to a further reduction in the number of village banks [9] - Regulatory guidance is expected to be introduced to help village banks refocus on their core missions and mitigate risks while supporting rural revitalization and small enterprises [9]