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13 banks were dissolved in one month, unprecedented...

2024-09-30

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after entering 2024, bank dissolution is nothing new.

but can you believe that 13 banks have been dissolved in one month?

1

whether you believe it or not, this is a fact that has happened.

judging from data released by the state administration of financial supervision, as of september 29, 2024, 13 banks have been approved for dissolution throughout september.

let's first look at the banks that have been defunct.

on september 6, jilin meihekou minsheng target bank was dissolved due to its acquisition by minsheng bank.

also on september 6, xinjiang’s wuqia county rural credit cooperative, aheqi county rural automobile, akto county rural credit cooperative, and artush city rural credit cooperative were approved for dissolution due to their merger to form a new rural commercial bank.

on september 9, yunnan qujing fuyuan fudian rural bank was dissolved due to the merger and absorption by fufudian bank.

on september 13, jilin jiaohe jiyin rural bank was dissolved due to its acquisition by jilin bank.

on september 14, huizhou zhongkai dongying rural bank and dongguan dalang dongying rural bank were dissolved due to the merger and absorption by dongguan rural commercial bank.

on september 24, hebei changlijia rural bank, qinhuangdao funingjia rural bank, and lujiawan rural bank were dissolved due to their acquisition by zhangjiakou bank.

on september 27, zhongshan ancient town nanyue rural bank was dissolved due to its acquisition by nanyue bank.

in just one month, 13 banks were approved to be dissolved, which is indeed a bit beyond everyone's expectations.

although after entering 2024, regulatory authorities and various localities are increasing the merger and reorganization of banks.

but i didn’t expect that the merger would happen so quickly after entering the second half of the year.

so far, 22 banks have been approved to be dissolved throughout 2024.

especially in the four months from june to september, 20 banks were approved to be dissolved.

of course, in addition to these banks that have been officially approved for dissolution, there are many banks that have announced mergers and absorptions and will also be dissolved in the future.

judging from data released by the state administration of financial supervision, 11 banks announced mergers and absorptions in september alone.

among them, three rural banks in hebei announced that they were acquired on september 2, and were officially approved for dissolution on september 24. it took only 22 days before and after, which is quite fast.

in addition, 11 banks announced equity changes in september.

judging from the content of the changes, most banks have begun to buy back the shares of some small shareholders, which may prepare them for future mergers, absorption or even dissolution.

2

so many banks have dissolved or been absorbed by mergers in a short period of time. are you surprised?

but perhaps the more surprising thing is yet to come.

at present, a new round of bank mergers and reorganizations is emerging in our country. in the future, many small banks will be absorbed by mergers and dissolved.

judging from the distribution of banks that will be dissolved in 2024, they are mainly rural commercial banks, credit unions and rural banks.

these three types of banks are also the banks with the largest number of legal entities in my country.

but all three types of banks actually have the same problem.

one is small scale.

nowadays, many rural commercial banks, credit cooperatives or village banks in small places basically have only one branch or a few branches, and their asset scale, credit scale, deposit scale and other aspects are relatively small.

the second is that the risk of savings is relatively high.

because of their small scale, many banks are unwilling to give in. therefore, many small banks have continued to expand in the past ten years and blindly expanded their credit scale.

however, due to limited business and weak overall competitiveness of these banks, it is impossible for them to find high-quality customers.

as a result, many small banks blindly lend money to some less-than-quality customers in order to expand one-sidedly, or bet a large amount of funds on a certain large customer.

there is no problem with this approach when the economy is developing at a rapid pace.

however, the environment of various industries has changed significantly in the past two years, and the bad debt rate has begun to increase, which has also caused the risks accumulated by these small banks to begin to be exposed.

for example, some small banks are highly dependent on real estate, and their development loan bad debt rate may reach more than 10%.

if these problems are not resolved, they may evolve into greater risks or even systemic risks.

in order to control this risk, in the past two years, regulatory authorities and various localities have been actively promoting the merger and reorganization of small banks, and reducing the risks of these small banks by introducing parent companies or large companies for acquisitions.

after several years of hard work, the risks of these small banks are now basically under control.

however, because there are many problems accumulated in history, large-scale adjustments are still needed to fundamentally solve them.

therefore, in the future, including the rural credit system and rural banks, mergers and reorganization will still be accelerated.

in the future, more and more small banks will "disappear" due to dissolution.

3

of course, the disappearance we are talking about here is only the disappearance of the name, and does not mean the disappearance of the subject.

as these small banks disband, they need to do several things.

first, properly handle various assets and liabilities.

before being disbanded, these small banks will definitely need to connect with the large banks they merged with, and transfer all types of assets (mainly credit), liabilities (mainly deposits) and business to the new banking system.

second, handle the system connection well.

the two banks are merged together. because of the different systems, this requires data docking and system docking.

this includes transferring some data of the absorbed bank to the parent bank. in addition, some login account information of the client also needs to be transferred.

third, handle employee placement well.

after the original bank was dissolved, a large number of bank staff needed to be resettled.

as for how to arrange it, different banks may take different measures.

judging from the actual situation, after these small banks are merged and absorbed, the original branches will not change, but will become a branch of the new bank, and the corresponding personnel will still work at this branch. there will not be much change. change.

of course, in order to optimize their employees, some banks may also eliminate some employees during the merger and absorption process.

fourth, complete the dissolution procedures.

after completing all the docking work, these small banks need to go through the dissolution procedures.

one is to cancel the name of the original legal entity so that the industrial and commercial authorities will no longer be able to find this organization.

the other is to hand over the financial license to the financial regulatory department, and the corresponding financial regulatory department will also cancel the relevant license and business of the original bank.

through these series of operations, employees and customers may not feel that the bank has been dissolved, but in fact these small banks no longer exist and have completely become branches of another bank.

but this disbandment may be the best ending for everyone.

for customers, through this merger and absorption, the bank's asset strength and risk resistance capabilities can be enhanced, ensuring the safety of everyone's funds.

for bank employees, by being absorbed by the merger, they will become employees of another bank, their business will be expanded, and their salary and income may also increase accordingly.

in short, the wave of mergers and absorption of small banks is unavoidable. this is not only to resolve bank risks, but also to enhance the overall competitiveness of small banks.