Gansu Financial Holding Group Co., Ltd. recently announced the completion of a 24 billion yuan capital injection into Gansu Rural Commercial Bank. Following this injection, Gansu Financial Holding Group now holds 53.43% of the bank's total shares, achieving absolute control.
The company disclosed that the funds originated from special bonds obtained by Gansu Province for replenishing the capital of small and medium-sized banks. This capital increase is based on an implementation plan issued by the General Office of the Gansu Provincial People's Government regarding adjustments to the usage targets and purposes of 42.6 billion yuan in special bonds for replenishing small and medium-sized bank capital. The injection is explicitly defined as a major measure to steadily advance the reform of Gansu Rural Commercial Bank, strengthen the construction of Gansu's financial capabilities, and enhance market competitiveness.
On the same day, Gansu Rural Commercial Bank issued a notice convening its first extraordinary shareholders' meeting in 2026. Agenda items include a proposal concerning the bank's absorption and merger of 25 institutions involved in the reforms, a proposal regarding the draft plan for absorbing and merging 24+1 institutions, and a proposal authorizing the organization to implement related merger work.
In July 2020, the State Council executive meeting decided to allow local government special bonds to reasonably support capital replenishment for small and medium-sized banks. From 2020 to 2022, the Ministry of Finance issued an additional 550 billion yuan in local government special bonds specifically for replenishing the capital of small and medium-sized banks.
Market sources indicate that special bonds provide greater support to high-risk regions and high-risk banks. While instruments like perpetual bonds and tier-2 capital bonds now play significant roles in capital replenishment for small and medium-sized banks, some institutions do not meet the criteria for issuing convertible bonds or "er-yong" bonds. Special bonds for small and medium-sized banks represent a unique category with lower thresholds, primarily aimed at mitigating risks such as insufficient capital and enhancing lending capacity to small and micro enterprises. The main injection models involve relatively simpler indirect equity participation and capital conversion agreement deposits.
The issuance of special bonds for small and medium-sized banks has slowed in 2024. So far this year, only Guangxi has issued 6 billion yuan in such special bonds. Disclosure documents show the raised funds will be entrusted by the regional finance department to Guangxi Financial Investment Group for a phased capital injection into Guangxi Rural Commercial United Bank, aiming to supplement its capital and deepen the reform of Guangxi's rural cooperative institutions.
Guangxi Rural Commercial United Bank was officially established on February 6, 2024, approved by the National Financial Regulatory Administration. It was formed through the restructuring of the Guangxi Zhuang Autonomous Region Rural Credit Cooperatives Union, with 14 sponsors including the regional finance department and Guangxi Communications Investment Group Co., Ltd. contributing capital.
In July last year, Jilin Province issued 26 billion yuan in special bonds to support the development of small and medium-sized banks. The raised funds were transferred by the provincial finance department to Jilin Financial Holding Group, which then injected capital into Jilin Rural Commercial Bank to help improve its capital adequacy ratio and risk resistance capability. This case is viewed as a typical example of using special bonds to support reform and risk resolution for small and medium-sized banks.
These developments indicate a subtle shift in the role of special bonds. They are no longer merely tools for capital replenishment but have become key factors in leveraging the integration of local financial resources and promoting the clearance of high-risk institutions. However, the true test after the capital injection lies in how the controlling shareholder can effectively exercise governance functions to drive the newly formed rural commercial bank towards improving corporate governance and maintaining risk control底线.
Comments