As 2025 draws to a close, the reform of provincial credit union associations is accelerating its implementation. On the 29th, the Xinjiang Rural Commercial Bank Co., Ltd., restructured from the Xinjiang Rural Credit Cooperatives, was officially inaugurated. On the 25th, the Guizhou Rural Commercial Union Bank, established through the restructuring of the Guizhou Provincial Rural Credit Cooperatives Union, was formally launched.
A review reveals that a total of seven provincial-level rural commercial banks or rural commercial union banks have been approved for operation this year, marking a significant increase compared to the numbers in 2023 and 2024.
Reforms of provincial credit union associations have now been implemented in 13 regions across the country since the Zhejiang Rural Commercial Union Bank was established in 2022. In 2023, the Liaoning Rural Commercial Bank and the Shanxi Rural Commercial Union Bank were successively approved for operation; in 2024, the Sichuan Rural Commercial Union Bank, the Guangxi Rural Commercial Union Bank, and the Hainan Rural Commercial Bank also received approval and commenced operations.
The pace of provincial credit union association reform has accelerated in 2025, with seven provincial-level rural commercial banks or rural commercial union banks already approved for operation. These include the Henan Rural Commercial Bank, the Jiangsu Rural Commercial Union Bank, the Jiangxi Rural Commercial Union Bank, the Inner Mongolia Rural Commercial Bank, the Jilin Rural Commercial Bank, the Guizhou Rural Commercial Union Bank, and the Xinjiang Rural Commercial Bank.
In terms of registered capital, five of these seven institutions boast registered capital exceeding 10 billion yuan. Notably, the Inner Mongolia Rural Commercial Bank, which integrated 120 institutions in one go, leads the group with a registered capital of 58.017 billion yuan. The registered capital of the Jiangsu Rural Commercial Union Bank and the Jiangxi Rural Commercial Union Bank falls below 10 billion yuan, at 7.7 billion yuan and 2.5 billion yuan respectively.
Regarding asset size, the Henan Rural Commercial Bank, Jiangsu Rural Commercial Union Bank, Jiangxi Rural Commercial Union Bank, and Guizhou Rural Commercial Union Bank all have assets exceeding one trillion yuan. Among them, the Jiangsu Rural Commercial Union Bank holds the top spot in asset size. According to an article published in July by its affiliated WeChat public account "江苏农信微视界," the total assets of rural commercial banks in the province surpassed 5 trillion yuan by the end of June, with deposit and loan balances reaching 4.13 trillion yuan and 3.25 trillion yuan respectively, representing increases of 7.6% and 5.4%.
A research report released by rating agency China Lianhe Credit Rating in January pointed out that reform models for provincial associations include the unified legal entity model, the union bank model, the financial services company model, and the financial holding company model.
Analyzing the reform models adopted, among the aforementioned seven institutions, four have chosen the provincial unified legal entity model, while three have opted for the union bank model.
"In this round of reform practice, the primary models for restructuring provincial associations are the provincial rural commercial union bank and the provincial rural commercial bank," stated Dong Ximiao, Chief Researcher at Zhaolian, in an interview.
Dong Ximiao analyzed that the provincial rural commercial bank model aids in the centralized allocation of resources, enhances management cohesion and execution, improves risk management and resolution capabilities, builds a unified brand image, and leverages economies of scale. This model can be adopted in provinces, autonomous regions, or municipalities with relatively small operational areas, a small number of institutions, or a higher number of high-risk institutions.
The Lianhe Credit report indicated that establishing a provincial rural commercial union bank involves creating a locally-focused bank with limited licenses within the provincial jurisdiction, while preserving the legal entity status of the original rural credit institutions. This model is less thorough in reform than the unified legal entity rural commercial bank model but avoids friction generated during the integration and restructuring of rural credit institutions. It is suitable for provinces with many high-quality rural commercial banks and significant resistance to reorganization and integration.
The report further pointed out that provincial rural commercial union banks can be categorized into two models based on shareholding structures: "bottom-up participation" and "top-down participation." The former refers to a union bank formed by investments from multiple rural credit institutions, while the latter involves the establishment of a union bank by the provincial finance department or local state-owned enterprises, which then takes stakes in the rural credit institutions within its jurisdiction.
In Dong Ximiao's view, while both provincial associations and provincial rural commercial union banks possess independent legal entity status, are banking financial institutions, and have certain operational functions, there are several reasons for restructuring into provincial rural commercial union banks. Firstly, it aims to rationalize the top-down equity relationship (with the exception of the Zhejiang Rural Commercial Union Bank), addressing the paradox between ownership and control rights. Secondly, it strengthens capital base, enhancing risk prevention and resolution capabilities. Compared to the provincial associations' registered capital, which ranges from tens of millions to around 100 million yuan, the capital of provincial rural commercial union banks often reaches tens of billions or even hundreds of billions of yuan. Thirdly, it allows for applying for more business qualifications and licenses, improving service capabilities, and better fulfilling the role of "small legal entities, large platform."
"The report predicts that most provinces in this reform round will adopt the union bank model. Among them, provinces with strong regional economic advantages and individually robust rural credit systems might opt for the 'bottom-up participation' model. Some provinces may adopt a step-by-step reform approach, first establishing a union bank before transitioning to a provincial unified legal entity rural commercial bank," the report stated.
Beyond the aforementioned 13 provinces (autonomous regions), several other regions have indicated their directions for provincial credit union association reform.
In April this year, the Guangdong Provincial Rural Credit Cooperatives Union revealed in its 2024 annual report that it is actively promoting the restructuring and establishment of a rural commercial union bank, strictly following the deployment requirements of the provincial party committee and government.
Gansu Province previously planned to establish a union bank but officially switched to the unified legal entity model this year. In August, Gansu Jinchang Rural Commercial Bank and Gansu Yongchang Rural Commercial Bank simultaneously published announcements in the *Jinchang Daily*, stating that they would hold extraordinary general meetings on August 20th to deliberate on matters related to establishing the Gansu Rural Commercial Bank.
The Hubei Provincial State-owned Assets and Enterprises Work Conference held in February 2024 proposed that Hubei Province would deeply implement a new round of state-owned enterprise reform deepening and upgrading actions and a five-year high-quality development action, completing the establishment of the Hubei Rural Commercial Union Bank.
On September 22nd, at a press conference held by the State Council Information Office on the theme series "Completing the '14th Five-Year Plan' with High Quality," Li Yunze, Director of the National Financial Regulatory Administration, stated that focusing on the proper disposal of high-risk institutions, key regions have formed reform and risk resolution plans based on the "one province, one policy" principle. Comprehensive measures including mergers and acquisitions, online repair, and market exit are being advanced forcefully and orderly. "Over the past five years, the reform of rural credit cooperatives has progressed steadily and swiftly, with over half of the provinces establishing provincial-level legal entities," Li Yunze said.
Xue Hongyan, a special researcher at Sushang Bank, noted in an interview that the reforms have achieved phased results, but further deepening faces multiple inherent challenges.
Xue Hongyan analyzed that, firstly, balancing "provincial coordination" with "grassroots vitality" is a key challenge, as county-level institutions may worry about losing operational autonomy and local characteristics after integration. Secondly, the historical burdens, asset quality, and capital strength of rural credit institutions vary greatly across different regions, requiring reform models to be highly tailored to local conditions. If the chosen model disconnects from the local economic and financial realities, it could affect the final outcome. Furthermore, under models like the union bank, clearly defining and implementing the "service" function of the provincial-level institution, preventing it from becoming a new administrative management tier, and thereby genuinely stimulating grassroots vitality, is also an issue that requires continuous exploration during the reform.
Looking ahead, Xue Hongyan stated that the primary principle for provincial credit union association reform is to unswervingly implement the "one province, one policy" approach. Based on the economic structure and institutional development status of different provinces, paths such as the unified legal entity or union bank should be differentially selected and optimized, avoiding a "one-size-fits-all" approach. Secondly, reforms will place greater emphasis on replenishing capital through multiple channels, such as introducing high-quality strategic investors, and leveraging their resources to enhance corporate governance and professional operation levels. Simultaneously, efforts will be made to promote the transformation of provincial-level institutions into genuine "service-oriented headquarters," focusing on providing mid-to-back-office support—like technology, risk control, and product R&D—that is difficult for individual institutions to undertake independently.
Xue Hongyan pointed out that ultimately, the effectiveness of all reforms will point to one fundamental goal: while enhancing the overall stability of the institutions, ensuring they do not deviate from their original purpose and positioning of serving localities, supporting agriculture, and aiding small businesses.
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