In November, Shanghai Pudong Development Bank (SPDB) has accelerated its takeover of rural banks under its umbrella.
On November 26, the Dalian branch of China’s National Financial Regulatory Administration approved the dissolution of Dalian Ganjingzi SPDB Rural Bank Co., Ltd. All its assets, liabilities, business operations, branches, employees, and other rights and obligations will be assumed by SPDB.
This follows a series of similar dissolutions of SPDB-affiliated rural banks. According to incomplete statistics, six rural banks under SPDB have been approved for dissolution and conversion into branches this year alone.
Key recent approvals include: - **November 25**: The Yunnan branch of the National Financial Regulatory Administration approved the dissolution of Fumin SPDB Rural Bank due to its acquisition by SPDB. - **November 18**: The Jincheng branch approved SPDB’s acquisition of Zezhou SPDB Rural Bank, with plans to establish four new branches in Jincheng. - **November 17**: The Xinjiang Financial Regulatory Bureau approved SPDB’s acquisition of Urumqi Midong SPDB Rural Bank and the establishment of a new branch. - **November 10**: The Wenzhou branch approved SPDB’s acquisition of Pingyang SPDB Rural Bank in Zhejiang. - **July 21**: The Gansu branch approved SPDB’s acquisition of Yuzhong SPDB Rural Bank.
SPDB began establishing rural banks in 2008, with its first in Mianzhu, Sichuan. By the end of 2024, it had set up 28 rural banks across 19 provinces, over 70% of which are located in central, western, and northeastern China.
As of late 2024, these 28 rural banks held total assets of 40.221 billion yuan, with deposits of 33.186 billion yuan and loans of 22.439 billion yuan. They served 1.433 million settlement accounts and 54,900 loan clients, with an average loan size of 408,800 yuan. However, they reported a net loss of 69 million yuan on revenues of 693 million yuan in 2024.
The accelerated "village-to-branch" conversions align with regulatory efforts to mitigate financial risks. At a key regulatory meeting in January 2025, reforming small and medium-sized financial institutions was highlighted as a top priority.
Dong Ximiao, Chief Researcher at Zhaolian and Deputy Director of the Shanghai Finance and Development Laboratory, noted that China’s rural bank restructuring will likely speed up, reducing their numbers. He emphasized the need for policy guidance to help these banks refocus on rural and micro-enterprise services while managing risks.
Dong also cautioned against over-reliance on mergers, urging measures to prevent large banks from crowding out smaller ones. He called for differentiated regulatory and tax policies to support small and medium-sized banks, along with incentives for well-performing city and rural commercial banks in managing rural bank risks.
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