Can rural banks hold "one acre and three quarters of land"
Since the beginning of this year, the main sponsoring banks of village banks in Shanxi, Henan, Jiangsu and other provinces have increased their holdings of shares in their village banks, which has aroused the attention of financial regulatory authorities and the market.
Faced with large and medium-sized banks, city commercial banks and other commercial banks continue to sink the rural market, the pressure of inter-industry competition among rural banks based on the rural financial market has increased sharply.
Can the village bank keep its one-acre three-quarters of land?
How should the village bank take the future?
Increase capital holdings to "blood" the strong body
Since the beginning of this year, many village and township banks have won the "blood replenishment" of the main originating bank.
For example, the Shanxi regulatory authority recently approved Changzhi Luzhou Rural Commercial Bank, the main sponsor, to increase its stake in Sanhe Rural Bank from 28.33% to 50%; Henan regulatory authorities have agreed to change the equity of Xu Rongxin Rural Bank, allowing Its main originating bank directional increase of shares; Jiangxi supervisory authority agreed to the Zixi Jiuyin Rural Bank’s directional share offering plan and raised shares from the main originating bank Jiujiang Bank; Jiangsu supervisory authority approved Guangzhou Rural Commercial Bank’s directional increase of its shareholding in Xuyi Zhujiang Rural Bank, holding The shareholding ratio rose from 51% to 75.5%.
How does the main sponsorship increase the capital of its village banks?
"The primary reason is to alleviate the problem of insufficient capital in village banks. For the main originating bank, after increasing its shareholding and continuing to'blood up', gaining greater control over the village and township banks will help to better strengthen the Bank management and services; for rural banks, capital adequacy and competitiveness will be improved after the main sponsor bank increases their holdings. This is also a two-way benefit." Dong Ximiao, chief researcher of China Merchants Finance, said in an interview with a reporter from the Economic Daily.
Village banks have gradually become an important part of rural finance.
According to the "China Rural Bank Industry Development Report 2019-2020", as of the end of 2019, the balance of rural banks’ small loans to support agriculture has remained above 90% for 7 consecutive years. The cumulative balance of loans issued to rural households and small and micro The loan ratio is 78.5%.
Experts said that the positioning of village and township banks is mainly to provide financial services for local farmers, agriculture and rural economic development. It can play a small role in supporting agriculture and small businesses. This is to solve the problem of low network coverage and financial supply in rural areas. Insufficiency and other issues played an important role.
However, in recent years, some policy banks and large commercial banks have successively initiated the establishment of rural banks, hoping to get a share of the blue ocean in the rural financial market.
"Large and medium-sized banks are superior to small banks in terms of financial services, intelligence, convenience, credit lines, and interest rate pricing. As large and medium-sized banking institutions have increased their efforts to "pin-point" small and micro-enterprise customers, this has led to the overall placement of loans by rural banks Competitiveness is weak, and there are cases where existing customers fail to renew their loans after maturity.” Ni Linyan, president of Chouzhou Village Bank in Dongtai, Jiangsu, told reporters.
As a "grassroot bank", rural banks have almost no capital advantage in competing with large and medium-sized banks on the same stage.
Large and medium-sized banks have squeezed the living space of rural banks in the process of sinking into county and rural markets.
As a result, the main originating bank is also constantly adopting various measures to replenish capital for the village and township banks in a timely manner to enhance their competitiveness.
Dong Ximiao said that rural banks are small in scale, weak in product innovation, and high in operating costs. Their capital replenishment channels are very narrow, and the main originator bank holdings is an important way for rural banks to enhance their capital strength. This is determined by their own characteristics.
In the early days of establishment, village banks mainly relied on the support of the main originating bank. If the main originating bank did not support enough, it would be difficult to get started.
The compaction master initiates risk control responsibilities
Regarding the capital increase of village and township banks, the supervisory department has repeatedly issued reminders to the main sponsoring bank to ensure that the capital invested by the main sponsoring bank is true and legal. After the capital increase and share expansion, the main sponsoring bank must continue to promote management and system innovation to improve its ability to withstand risks.
In order to guide the main originating bank to properly control the risk, the financial regulatory authorities have made important arrangements for the risk prevention of rural banks in recent years.
First of all, in 2018, the supervisory authority put forward requirements on the performance of the main sponsors’ duties. According to the "Notice on the Pilot Work of Investment Management Rural Banks and "Multi-County and One Line" Rural Banks", the establishment of investment management rural banks is allowed to Unified management, and perform the responsibilities of the main sponsor for the invested village and township banks.
Secondly, the China Banking and Insurance Regulatory Commission issued the "Notice on Further Promoting the Reform and Reorganization of Rural Banks to Resolve Risks" this year to support the main sponsoring bank to supplement capital to the village and township banks and strengthen the incentives and constraints on the main sponsoring bank, and to further urge the main sponsoring bank to implement risk disposal Take the lead.
In the long run, consolidating the responsibilities of different sponsors will have a positive effect on the sustainable development of rural banks.
The latest data shows that as of the end of 2019, 4 large commercial banks have established a total of 139 rural banks, 6 joint-stock banks have established 69 rural banks, 95 city commercial banks have initiated the establishment of 463 rural banks in 215 cities, and 175 rural commercial banks. Initiated the establishment of 935 village and township banks in 271 cities.
Experts said that the management models, corporate governance concepts, business strategies, and risk control strategies of different types of lead banks play an important role in the development of rural banks.
In this diversified competitive landscape, the development of rural banks must build their own differentiated competitive advantages and cultivate the rural market on the one hand; on the other hand, the parent company must build a bottom line for risk prevention and control.
Dong Ximiao suggested that the restrictions on the shareholding ratio of strategic investors in rural banks should be appropriately relaxed, and the main sponsoring bank should be supported to introduce external qualified investors to participate in the risk mitigation work of rural banks.
If the main originating bank fails to perform its lead risk disposal responsibilities, it can adopt supervisory interviews and restrictive measures on administrative licensing matters.
Explore a suitable development path
In the case of increasingly fierce market competition, the market space left for village banks is getting smaller and smaller, which puts forward higher requirements for improving the management and operation of village banks.
In the future, how should the village bank take the road?
Zeng Gang, deputy director of the National Finance and Development Laboratory, suggested that, first of all, maintain the status of an independent legal person of rural banks, explore a management approach, and control dozens of rural banks through a main sponsor to form a moderate scale effect.
For example, Bank of China Fullerton has initiated the establishment of rural banks in large-scale and batch sizes since 2011.
As of the end of December 2020, there are 126 legal entities and more than 180 township sub-branches in 22 provinces across the country, with a total of more than 180 billion yuan in loans, providing loan services to 600,000 customers, including agriculture-related and small and micro loans It accounts for more than 90% of all loans.
Secondly, rural banks cannot be called medium-sized banks. They are small banks among small banks. From capital adequacy ratios to daily corporate governance regulatory requirements, as well as regulatory aspects at the business level, it is recommended that such small banks should have a set of simplified, Differentiated regulatory standards.
Third, regulatory agencies and local governments should play the role of monetary policies such as agricultural re-lending and interest rates in encouraging rural financial development, implement targeted tax reductions and fee subsidies, and guide village banks to extend and develop financial services for rural and rural households.
For example, the supervisory authority can include the rural bank's agricultural support business into the evaluation system, combined with the adjustment of preferential tax policies, guide the rural bank to increase agricultural support credit, and vigorously improve agricultural support services.
To promote the development of rural banks, it is also necessary to establish a benign exit mechanism.
Dong Ximiao said that if the capacity of the main sponsor is limited, it can be transferred to an organization capable of management through a market-based mechanism, so that license resources can also be optimally allocated.
For some poorly-operated main originating banks, a mechanism should be established to guide them to withdraw or deal with them through mergers.
Specifically, scientific system design should be carried out in terms of share transfer and the qualification of transferees to break the exit barriers of shareholders of rural banks and enhance their enthusiasm for investing in rural banks.
Wang Baohui
Wang Baohui