Core Viewpoint - Postal Savings Bank of China (PSBC) is set to absorb its wholly-owned subsidiary, Postal Huinong Bank, marking the end of the independent legal entity operation model for this direct bank, which was established just over three years ago with a registered capital of 5 billion yuan [1][3]. Company Summary - Postal Huinong Bank was established on January 7, 2022, with a registered capital of 5 billion yuan, fully owned by PSBC, and aimed at serving agriculture, small and micro enterprises, and the general public [3]. - The merger is driven by PSBC's increased investment in financial technology and the establishment of a digital service model primarily through mobile banking, which has significantly enhanced its online service capabilities [3]. - The merger is expected to achieve strategic integration, optimize resource allocation, and reduce management costs, thereby improving overall operational efficiency for PSBC [3]. Industry Summary - The absorption of Postal Huinong Bank signals a turning point in the development cycle of direct banks in China, transitioning from a phase of rapid growth to one of consolidation and exit [1][5]. - The independent legal entity model for direct banks is now left with only one remaining entity, Baixin Bank, as many others face channel integration and closures [5][6]. - The history of direct banks in China shows a peak in development from late 2014 to 2016, followed by a decline characterized by closures and consolidations [5][6]. - The future of independent legal entity direct banks is uncertain, as the industry shifts focus towards differentiated capabilities and specific customer segments rather than maintaining independent operations [7].