Core Viewpoint - The acceleration of mergers and restructuring among small and medium-sized banks in China is a necessary choice for the financial system to actively mitigate risks and optimize its structure to adapt to the new stage of economic development [6][7]. Group 1: Current Trends in Banking Sector - Over 368 banks have been deregistered this year due to regulatory approvals for mergers or dissolutions, surpassing the total for the entire previous year, with 176 of these being village banks [3][4]. - Notable mergers include the acquisition of Jinzhou Bank by Industrial and Commercial Bank of China (ICBC), marking a significant case of a state-owned bank acquiring a city commercial bank [3][4]. Group 2: Reasons for Restructuring - The restructuring is driven by the need for small and medium-sized banks to survive and develop in a competitive market dominated by larger banks, which have better resources and customer bases [6]. - Many small banks face challenges such as high operating costs, weak risk management capabilities, and high non-performing asset ratios, making them vulnerable in a changing macroeconomic environment [6][7]. Group 3: Future Outlook - The goal of the restructuring process is not merely to reduce the number of banks but to enhance governance and develop specialized operations that effectively serve local economies and promote inclusive finance [5][6]. - Experts suggest that while restructuring can lower regional financial risks and optimize resource allocation, care must be taken to avoid negatively impacting rural financial services [7].

Core Viewpoint - The merger and restructuring of small and medium-sized banks in China has accelerated significantly, becoming an important path for these banks to mitigate risks and promote transformation and upgrading [3][4]. Group 1: Reasons for the Merger and Restructuring Wave - The slowdown in macroeconomic growth and the emergence of financial risks are driving the acceleration of mergers and restructurings among small and medium-sized banks [4][7]. - Internal governance structures of small and medium-sized banks are inadequate, necessitating optimization through mergers and restructurings [7][8]. - The upgrading of economic development stages requires adjustments in the banking industry structure to better meet the evolving financial service demands [9][10]. Group 2: Evaluation of Merger and Restructuring Effects - Mergers and restructurings have led to an increase in capital adequacy ratios, enhancing the solvency of banks [15]. - The non-performing loan ratio has decreased, indicating improved asset quality and risk management capabilities [15]. - Liquidity ratios have declined, suggesting enhanced management capabilities post-merger [15]. - Profitability has not shown significant improvement, indicating that the synergistic effects of mergers may take time to materialize [16]. - The ability to cover risks has significantly increased, reflecting better provisioning for loan losses [16]. Group 3: Policy Implications - Continued and prudent advancement of mergers and restructurings is essential to enhance the risk resistance capabilities of small and medium-sized banks [18]. - Increased policy support is necessary to help these banks regain operational autonomy and efficiency post-merger [18]. - Improvement of governance structures post-merger is crucial for ensuring long-term effectiveness [18]. - Strengthening regulatory collaboration and market mechanisms is vital for the orderly progress of mergers and restructurings [18]. Group 4: Conclusion - The merger and restructuring of small and medium-sized banks is a key measure for deepening structural reforms in the financial supply side, directly impacting the stability of China's financial system and its ability to serve the real economy [19].

Core Viewpoint - The trend of "mergers and restructuring, reduction and quality improvement" has become the main theme of reform for small and medium-sized banks in China, with a significant increase in the number of village banks exiting the market this year [1][4]. Group 1: Mergers and Restructuring - As of July 14, 2023, 90 village banks have appeared on the "exit list," surpassing the total number of village banks that exited last year [1][4]. - The restructuring of small and medium-sized banks is expected to accelerate, leading to a gradual reduction in the number of village banks [2][8]. - Recent cases of mergers include Guizhou Bank's absorption of Tongren Fengyuan Village Bank and Xinjiang Bank's planned merger with Xinjiang Huihe Bank [3][8]. Group 2: Merging Models - The "village reform branch" and "village reform division" models have become mainstream for the integration of small and medium-sized banks, where village banks are absorbed and transformed into branches of larger banks [5][6]. - Over 50 village banks have been merged or restructured in the first half of the year through these models, with participation from regional small banks, joint-stock banks, and even state-owned banks [6][7]. Group 3: Policy and Risk Management - The acceleration of village bank integration is driven by policy initiatives aimed at improving governance and risk management within financial institutions [8]. - The People's Bank of China has highlighted the rising non-performing loan rates among rural commercial banks, which stood at 2.86% in the first quarter, significantly higher than other bank types [8]. Group 4: Quality Improvement - The reduction in the number of small and medium-sized banks is expected to enhance service quality, shifting financial resources from extensive expansion to focused development [9]. - Experts emphasize that the reduction in institutions should not be equated with quality improvement, and village banks must enhance governance, risk control, and digital capabilities for self-reform [9].