Recently, another bank with assets of more than one trillion yuan was born.On May 25, the official website of the China Banking and Insurance Regulatory Commission disclosed the "China Banking and Insurance Regulatory Commission's Reply on the Merger of Luoyang Bank, Pingdingshan Bank and Jiaozuo China Travel Bank by Zhongyuan Bank".The reply mentioned that it "approved Zhongyuan Bank to absorb and merge Luoyang Bank, Pingdingshan Bank, and Jiaozuo China Travel Bank, and to undertake all the assets, liabilities, business, institutions and employees of Luoyang Bank, Pingdingshan Bank, and Jiaozuo China Travel Bank".
It is reported that after the reform and reorganization, the total assets of Zhongyuan Bank exceeded 1.2 trillion yuan, and it has 18 branches, more than 700 business outlets, more than 20,000 employees and 17 affiliated institutions.From the perspective of asset size alone, Zhongyuan Bank will jump from the 11th place among city commercial banks to the 7th place.
The author has noticed that in recent years, the pace of mergers and acquisitions among small and medium-sized banks has accelerated significantly.Since 2020, Sichuan Bank, Shanxi Bank, and Liaoshen Bank have been newly established or merged and reorganized.This is due to the promotion of supervision. The heads of relevant departments of the China Banking and Insurance Regulatory Commission have repeatedly stated publicly that they encourage high-quality banks, insurance companies and other qualified and compliant institutions to participate in the merger, acquisition and restructuring of small and medium-sized banks.At a recent briefing, some department heads further stated that they will work with relevant departments to implement support policies to encourage small and medium-sized banks to merge and reorganize, and promote the merger, reorganization and regional integration of small and medium-sized rural banks in accordance with the principle of marketization and rule of law.
Under normal circumstances, mergers and reorganizations will help banks become bigger and stronger and improve their ability to resist risks.In theory, an important indicator to measure the strength of a bank is its asset size. The larger the asset size of a bank, the stronger the ability to resist risks.In the context of the pressure on the assets of small and medium-sized banks in recent years, actively promoting mergers and acquisitions will undoubtedly help prevent and resolve the relevant risks of small and medium-sized banks.
In addition to preventing and defusing risks, accelerating mergers and reorganizations among small and medium-sized banks also needs to expand their business coverage and strengthen their main businesses.Some city commercial banks and rural commercial banks with strong profitability and good development in their regions often seek opportunities to hold or take shares in regional banks with weaker qualifications in the same province, so as to achieve the purpose of extending their business tentacles.Taking Zhongyuan Bank, which absorbed and merged three banks this time, as an example, the bank's 2021 annual report shows that the annual operating income of the bank was 19.283 billion yuan, a year-on-year increase of 0.8%; the net profit attributable to the parent was 3.565 billion yuan, an increase of 8% year-on-year.In terms of asset quality, the bank's non-performing loan ratio was 2.18%, down 0.03 percentage points from the beginning of 2021, and the non-performing loan ratio of newly issued loans remained at a good level within 1%.
Judging from the annual report performance, Zhongyuan Bank is undoubtedly a high-quality bank, and its merger and absorption of other small and medium-sized banks will achieve the effect of "1+1>2" in a high probability.For the industry, it is worth noting that to see whether a bank is of high quality and has the ability to resist risks, not only its asset size, but also the bank's profitability and asset quality are equally important.In addition, because the current merger and reorganization of small and medium-sized banks is mainly dominated by local governments, it is recommended that some places should do what they can, and must not engage in "lalang matching", let alone lead to other risks due to risk prevention.When high-quality banks implement mergers and reorganizations, they must clarify the equity relationships within small and medium-sized banks.Relevant local departments should make detailed arrangements in terms of shareholding structure, personnel arrangement, and institutional reorganization, effectively protect the legal and compliant rights and interests of all parties, prevent possible risks, and steadily promote the merger and reorganization of small and medium-sized banks.
【Editor: Shi Rui】
