Author: Duan Siyu

　　With the fermenting of the "difficulty in withdrawing money" incident of Henan rural banks, the market has once again focused on the group of rural banks.

Although the business scale of village banks is not large, they have become the largest type of banks in China in terms of number.

According to data from the China Banking and Insurance Regulatory Commission, by the end of 2021, there were 1,651 rural banks in the country, accounting for about 36% of the total number of banking financial institutions in the country.

　　According to the statistics of Enterprise Early Warning, these more than 1,600 village and town banks are distributed in 31 provinces (autonomous regions and municipalities directly under the Central Government) across the country.

Among them, there are more than 100 village and town banks in Shandong and Hebei, 126 and 110 respectively; Henan and Guizhou follow closely with 86 and 84 respectively.

　　In recent years, thanks to regional advantages and relatively high deposit interest, the deposit products of village banks have been favored by some users.

However, recently, with the delisting of deposit products on Internet platforms, the suspension of interest-bearing products on archives, and the reduction in the scale of structured deposits, rural banks are limited by the lack of offline branches, a single source of funds, and weak comprehensive strength. The reason is that there is a greater pressure to hold storage, so fancy storage is frequent.

　　At the same time, affected by various factors, the risk level of a small number of rural banks has risen rapidly, and related problems are more prominent.

According to the statistics of the central bank, as of the second quarter of 2021, a total of 122 rural banks are high-risk institutions, accounting for about 29% of all high-risk institutions.

To mitigate risks, mergers and reorganizations of some rural banks are also progressing steadily.

In the view of industry insiders, under the background that the regulatory authorities continue to strengthen supervision and speed up risk disposal, the integration and reform of village and township banks will be accelerated, excellent players will have the opportunity to "promote", and the poor will exit the market in a stable and orderly manner under the guidance of supervision.

1651 Village Banks Scanned

　　Since the pilot work of village and town banks was launched in 2006, village and town banks have been developing in my country for 15 years.

In December 2006, the former China Banking Regulatory Commission issued "Several Opinions on Adjusting and Relaxing the Access Policy of Banking Financial Institutions in Rural Areas and Better Supporting the Construction of New Socialist Countryside", proposing that six provinces (autonomous regions) such as Hubei, Sichuan, and Jilin should implement the policy. Set up pilot village banks in rural areas.

　　The first village bank, Sichuan Yilong Huimin Village Bank, was established in March 2007, jointly established by local city commercial banks and private capital, with a registered capital of 2 million yuan.

　　After the 3-year pilot program, village banks are on the fast track of development.

In July 2009, the former China Banking Regulatory Commission issued the "General Work Arrangement for New Rural Financial Institutions from 2009 to 2011", and planned to set up 1,293 new rural financial institutions nationwide within three years.

Among them, village banks accounted for 1027.

　　After several years of development, the village bank has now become a "micro bank" with the largest number of institutions, the smallest single scale, the most grassroots customer service, and the most prominent features of supporting agriculture and small businesses.

Data show that by the end of 2021, there were 4,602 banking financial institutions.

Among them, there are 1 development financial institution, 2 policy banks, 6 state-owned banks, 12 joint-stock banks, 128 city commercial banks, 19 private banks, 41 foreign-funded banks, 1,595 rural commercial banks, and 23 rural cooperative banks. , 577 rural credit cooperatives, 1651 village banks and so on.

According to this calculation, the number of village banks accounts for about 36% of the total number of financial institutions.

　　From the perspective of the distribution area of ​​village banks, according to the statistics of enterprise early warning, a reporter from China Business News shows that more than 1,000 village banks are mainly distributed in 31 provinces (autonomous regions and municipalities) across the country. Among them, Shandong, Hebei and Henan are among the top three; Guizhou , Jiangxi, Shanxi, Hunan, Jiangsu, Inner Mongolia and Yunnan ranked 4th to 10th respectively, with 84, 77, 77, 74, 74, 73 and 73 village and town banks respectively; Qinghai and The number of village banks in Tibet is only 5 and 2 respectively.

　　In terms of the time of establishment, 2011 was the year with the largest number of village banks established, reaching 286.

In the same year, the former CBRC issued a draft for comments on the Interim Measures for the Administration of Sub-banks of Commercial Banks and Village Banks (hereinafter referred to as the “Interim Measures”), which proposed the mode of sub-banks of village and town banks to deal with the situation that the number of village and town banks established in the development stage did not meet the standard.

The "Interim Measures" support eligible banks to initiate the establishment of village banks in batches, requiring the main sponsor's total assets to be no less than 100 billion yuan, and the subsidiary bank must have absolute control over the village bank.

However, the "Interim Measures" has not progressed so far.

　　In this year, Henan also increased the pace of construction of village banks.

It is understood that in 2011, Henan Province newly established 23 village and town banks, ranking second in the country and first in the central region; the cumulative number of established village banks reached 40, covering 51 counties in the province, ranking among the top in the country.

According to a notice previously issued by the Xuchang Public Security Bureau, a criminal gang headed by Lu, the actual controller of Henan New Fortune Group Investment Holding Co., Ltd., was suspected of using village banks to commit a series of serious crimes, also starting in 2011.

　　In terms of registered capital, the registered capital of village banks is relatively low.

According to relevant requirements, the registered capital of a village bank established in a prefecture (city) shall not be less than RMB 50 million; the registered capital of a village bank established in a county (city) shall not be less than RMB 3 million; The registered capital of a village bank established shall not be less than RMB 1 million.

In contrast, when new private banks are established in the future, the regulatory requirements require a minimum registered capital of at least 1 billion yuan, and there are also requirements for major private capital shareholders such as continuous profitability and the proportion of net assets to total assets.

　　According to the statistics of Enterprise Early Warning, among the 1,651 village and township banks, there are more registered capitals of 30 million, 50 million and 100 million yuan, 189, 265 and 342 respectively; the highest registered capital is Guangxi Pingnangui Silver Village Bank Co., Ltd. reached 11.664 billion yuan; the lowest was Fenxi Taihang Village Bank Co., Ltd., which reached 6 million yuan.

　　In terms of total capital, according to incomplete statistics, as of now, there are 7 rural banks with total assets exceeding 10 billion yuan, which are located in different regions, namely Beijing Shunyi Ginza Village Bank Co., Ltd. and Xiangxi Changhang Village Bank Co., Ltd. , Guangyuan Guishang Rural Bank Co., Ltd., Linyi Hedong Qishang Rural Bank Co., Ltd., Shenzhen Futian Ginza Rural Bank Co., Ltd., Zhongmu Zhengyin Rural Bank Co., Ltd. and Jiangxi Ganzhou Ginza Rural Bank Co., Ltd.

There are more than 910 village and town banks with total assets of more than 100 million yuan, but not all of the above village and town banks are profitable.

　　In terms of performance, among the more than 1,000 banks, a small number of banks have disclosed the latest financial data for 2021, and the regions with the highest proportion are concentrated in regions with better overall economic development such as Jiangsu and Zhejiang.

According to the statistics of Enterprise Early Warning, among the more than 1,600 village and town banks, 354 village and town banks have publicly disclosed the latest data in 2021, accounting for 21% of the total.

Judging from the disclosed data for 2021, there are 305 profitable village and town banks, 5 with a net profit exceeding 100 million yuan, and the lowest net profit is 28,800 yuan.

In addition, there are 28 village and town banks with net losses, accounting for 8%.

　　In terms of NPL ratio, according to the statistics of Huaan Securities Research Report, the NPL ratio of rural banks is significantly higher than that of city commercial banks and rural commercial banks.

According to the "2021 Rural Bank Research Report", the non-performing loan ratios in 2018, 2019 and 2020 were 3.66%, 3.7% and 4%, respectively.

By the end of 2020, the non-performing rate of large state-owned banks was only 1%, the non-performing rate of joint-stock banks was 2%, the non-performing rate of city commercial banks was 2%, and the non-performing rate of rural commercial banks was 2.4%.

　　In terms of supervision and punishment, according to the statistics of the enterprise warning system, since 2018, there have been about 1,500 pieces of information related to the punishment of village and town banks. The punishment departments are mainly the branches of the central bank and the branches of the China Banking and Insurance Regulatory Bureau. The reasons include illegal operation, violation of anti-money laundering laws, imperfect internal systems, false or seriously misleading information disclosure, serious failure to perform the three checks on loans, granting loans across business regions, and illegal sales of agency insurance products.

　　At the same time, the equity changes of village banks are also frequent.

On the official website of the China Banking and Insurance Regulatory Commission, a search was conducted using the keywords "village and township banks" and "equity change", and there were 1,866 pieces of relevant information.

The latest is the June 14 supervisory approval on the change of the major shareholders of Lixian Hunong Commercial Rural Bank Co., Ltd., saying that it agreed to transfer 3 million shares of the bank held by Hunan Ping An Medical Equipment Technology Co., Ltd. to Zheng Datian.

After the transfer, Zheng Datian and his related parties hold 3 million shares of the bank, with a shareholding ratio of 6%.

　　Dispersed ownership and chaotic governance are common problems faced by village and township banks.

Huang Dazhi, a researcher at Xingtu Financial Research Institute, told reporters that among all banks, village banks have lower requirements for shareholders. Because of this, village banks have a "sponsor" system that is different from other banks.

Many rural commercial banks hope to break through geographical restrictions and vigorously initiate the establishment of rural banks, but they are also rural financial institutions, and many rural commercial banks also have problems.

Fancy storage under "high pressure"

　　Due to the limitation of outlets, marketing channels, brand reputation and other reasons, compared with large state-owned banks and joint-stock banks, village and township banks are facing greater pressure to attract reserves.

In order to attract depositors, some banks tend to offer higher interest or yields.

　　However, in the past two years, the regulation of competition in the entire deposit market has been far more stringent than before, including structured deposits, smart deposits, Internet deposits and other "sharp weapons" for saving deposits have been constrained by policies, coupled with the adjustment of the upper limit of deposit interest rates, the entire industry. In particular, the difficulty of attracting reserves for village banks has further increased.

　　"For example, some small banks in the past, selling deposits on the Internet platform, not only broke through the regional restrictions, broadened the customer base, and some even provided interest rate hike coupons in disguised form to achieve the purpose of attracting deposits, but with the increase of Internet deposits. If it is removed from the shelves, these banks will have to find other channels." An executive of a rural commercial bank once told reporters.

　　According to statistics from CITIC Securities, since 2020, it has become more difficult for banks to grow stable deposits (term deposits + structured deposits).

Among them, the year-on-year growth rate of small and medium-sized banks has dropped significantly, and they are facing greater pressure on the liability side.

This is also the consensus of the industry. For a long time, small and medium-sized banks have been affected by factors such as business area restrictions, weak product R&D capabilities, and limited inter-bank liabilities.

　　In this context, village banks have made various tricks in attracting reserves.

First, savers are still attracted by high interest rates.

The first financial reporter noticed that among the fixed deposits, the interest rate of most village banks is higher than that of large state-owned banks.

Taking Lu’s Central Plains Rural Bank as an example, the bank’s annualized interest rates for lump-sum deposits and withdrawals for 3-month, 6-month, 1-year, 2-year and 3-year terms are 1.6%, 1.8%, 2.25%, 2.85%, 3.5 %, while the annualized interest rates of ICBC deposits of various terms are 1.35%, 1.55%, 1.75%, 2.25% and 2.75%, respectively, with a difference of 0.25, 0.25, 0.5, 0.6 and 0.75 percentage points.

　　Huang Dazhi told reporters that this is mainly due to the obvious difference between the service groups of small and medium-sized banks and large banks. Small and medium-sized banks only serve local areas, and most of them serve small and medium-sized enterprises and people with lower incomes. Small enterprises are more risky and loan Interest rates also tend to be higher.

"On the whole, small and medium-sized banks give higher interest rates when absorbing deposits, which means higher costs, but also higher pricing when lending."

　　In addition, Huang Dazhi also said that large banks have better brand reputations than small and medium-sized banks, and can attract deposits at lower interest rates when absorbing deposits.

If compared with general commodities, large banks have lower interest rates when selling "deposit" products, which means that for customers, the price of purchasing this product is higher; at the same time, small and medium-sized banks often have a foothold and their outlets are limited to In a certain region, the construction of online channels is relatively simple, with only some basic functions.

In this regard, when users choose a higher interest rate from small and medium-sized banks, they actually choose a "product" that is relatively inconvenient and lacks other rights and interests.

　　In addition to relatively high interest rates, small and medium-sized banks such as village banks also attract customers through deposit lottery draws and bonus points.

For example, Zhongjiang Rongxing Rural Bank launched an activity in 2021, saying that customers with a fixed deposit of more than 10,000 yuan (inclusive) can participate in the on-site lucky draw once with the deposit receipt, and the first prize is 2 shopping cards of 100 yuan; Xinping Beiyin Village banks have launched an activity of depositing bonus points. A fixed deposit of 10,000 yuan is equivalent to 100 points, which can be exchanged for rapeseed oil, detergent and other products.

　　Banks' promotion of marketing activities on deposits and wealth management is actually a disguised price competition, which reflects the intensification of the pressure on storage.

The consensus in the industry is that, with the loan side facing the structure, the regulatory tightening on off-site storage, and the steady progress of the marketization of deposit interest rates, the pressure on small and medium-sized banks, including village banks, to recruit storage will continue to rise.

Village bank reshuffle will intensify

　　Although the overall development of rural banks is good, a few rural banks have been affected by various factors in recent years, and their risk levels have risen rapidly, and related problems have become more prominent.

According to the statistics of the central bank, as of the second quarter of 2021, a total of 122 village and township banks are high-risk institutions, accounting for about 29% of all high-risk institutions, accounting for a relatively high proportion.

　　In January 2021, the "Notice on Further Promoting the Reform and Restructuring of Rural Banks to Resolve Risks" (hereinafter referred to as the "Notice") issued by the China Banking and Insurance Regulatory Commission clearly pointed out that the reform and reorganization of rural banks shall be promoted, the capital replenishment of rural banks shall be accelerated, and risk disposal shall be strengthened. To achieve sustainable and healthy development.

　　According to the requirements of the "Notice", the regulators have provided a variety of operation methods to resolve the risks of village and town banks. In addition to supporting the main sponsoring bank to replenish capital to the village and town banks and introducing qualified strategic investors for acquisition and capital injection, it is promoted by absorbing and merging its village banks. Reform and restructuring has also become an important approach.

　　Since then, the pace of reform, risk reduction and merger and reorganization of village and town banks has been accelerated.

In fact, at the end of 2020, two rural banks in Chongqing and Ningbo (Chongqing Wanzhou Binjiang BOC Fullerton Rural Bank and Ningbo Ninghai Xidian BOC Fullerton Rural Bank) were approved by the local China Banking and Insurance Regulatory Bureau to dissolve, respectively for liquidation, Merger by absorption is regarded by the market as the first batch of well-documented national village banks to dissolve.

　　Entering 2022, more banks will join the reform and restructuring team.

A few days ago, Ningxia Banking and Insurance Regulatory Bureau approved the merger of Ningxia Pingluo Rural Commercial Bank and Pingluoshahu Village Bank.

According to the approval requirements, Ningxia Pingluo Rural Commercial Bank should handle the preparations for merger and acquisition in strict accordance with relevant laws and regulations, and urge Pingluoshahu Rural Bank to complete the dissolution-related matters.

　　According to public information, the main sponsor and major shareholder of Pingluoshahu Rural Bank is Ningxia Yellow River Rural Commercial Bank.

Ningxia Yellow River Rural Commercial Bank is also the largest shareholder of Fangping Luo Rural Commercial Bank, with a shareholding ratio of 45.3%.

　　In addition, there are listed banks to increase capital in rural banks.

Solaris Bank recently disclosed an announcement that in order to further strengthen its control over Jingjiang Runfeng Rural Bank, improve decision-making management efficiency, and enhance market competitiveness, it plans to acquire some of its shareholder equity.

After the acquisition, the bank's shareholding ratio increased from 54.33% to more than 90%, making it the largest shareholder.

It is reported that Sunong Bank will acquire the equity of some shareholders of Jingjiang Runfeng Rural Bank at 1.74 yuan per share (the bank’s audited net assets per share in 2021).

　　Before that, Guangzhou Rural Commercial Bank announced in December 2021 that in order to promote the stable operation of its subsidiary, Beijing Mentougou Zhujiang Rural Bank, and improve its capital adequacy, the bank will act as the main sponsor and plan to subscribe for Beijing Mentougou Zhujiang Rural Bank. All newly issued shares, namely 250 million shares, with a total investment of approximately RMB 250 million.

At the same time, the capital increase plan will be carried out in three stages within two years. After all the increase in holdings, the bank's shareholding ratio will increase from the original 84.44% to 91.33%.

　　Zhou Maohua, a macro analyst of China Everbright Bank, said in an interview with a reporter from China Business News that there are currently a large number of rural banks in China, and the number is more than the number of domestic counties. Cases of reform and reorganization of village and township banks will increase significantly.

　　The China Banking and Insurance Regulatory Commission also mentioned the risk management of small and medium-sized banks at the briefing meeting held in May this year.

The China Banking and Insurance Regulatory Commission said that since 2018, a total of 627 high-risk rural small and medium-sized banks have been disposed of, with a total of 2.6 trillion yuan in non-performing loans, more than the sum of the previous ten years.

The China Banking and Insurance Regulatory Commission also stated that it will continue to further promote the reform of small and medium-sized rural banks to reduce risks.

In addition, it once again mentioned "encouraging high-quality banks, insurance companies, financial asset management companies and other institutions to participate in the merger and reorganization of small and medium-sized rural banks", and will implement policies to encourage the merger and reorganization of small and medium-sized banks.

　　Huang Dazhi told reporters that on the one hand, the regulatory attitude shows the objective risks of small and medium-sized rural financial institutions, and on the other hand, it also shows that as an important force serving the rural economy, it is indispensable.

Therefore, there is a high probability that policies will be adopted in the future to encourage high-quality institutions to participate in the mergers and acquisitions of small and medium-sized rural banks.