The reform of village banks has introduced a new debt assumption method characterized by "no cash and no equity change" through the inclusion of a trust structure as an "intermediate layer." Its core innovations lie in the "isolation of asset ownership confirmation and交割" and the "non-cash" disposal of non-performing assets.
Recently, Bank of Guizhou (6199.HK) released an "Announceable Transaction" document stating that, according to a deposit assumption agreement, commencing from the assumption date, the debts and associated rights formed under the subject deposits of Longli Guofeng Village Bank will be assumed by Bank of Guizhou.
The "Announceable Transaction" shows that the total principal and interest of the deposits at Longli Guofeng Village Bank amounted to 1.913 billion yuan. After deducting the relevant权益随同债务承继 from Longli Guofeng Village Bank, the final assumption price was 1.849 billion yuan.
"As the principal sponsoring bank, Bank of Guizhou assumes the deposits of Longli Guofeng Village Bank. The latter entrusts its asset收益权 to establish a trust plan, and our bank, using the creditor's rights formed from assuming Longli Guofeng's deposits, receives corresponding trust plan beneficiary shares to pay the consideration for assuming the deposits," Bank of Guizhou further stated.
The form of trust plan beneficiary shares is commonly seen in bankruptcy reorganizations of general enterprises, but this marks its first application in banking sector reform. Several industry professionals indicated that introducing the trust structure as an "intermediate layer" features core innovations in the "isolation of asset ownership confirmation and交割" and the "non-cash" disposal of non-performing assets.
"Specifically, the principal sponsoring bank did not use cash to acquire the village bank's equity or assets, nor did it apply for public bailout funds. Instead, it precisely swapped the deposit creditor's rights it assumed with the future收益权 generated from the village bank's credit assets by creating a trust plan," said Xue Hongyan, a special researcher at Sushang Bank.
"The innovation of this model lies in the fact that, by establishing a trust plan, the transferor packages the asset收益权 into the trust, and the transferee only needs to hold the trust beneficiary right as a single certificate, which greatly enhances the efficiency of the reorganization," said Yang Xiang, PhD in Law and智库 expert at the National Science and Technology Innovation Research Institute, who also advised paying attention to compliance and regulatory arbitrage risks. For regulators, the primary concern is whether this constitutes using a trust channel to move non-performing assets "off-balance-sheet" or for "non-clean off-balance-sheet" purposes.
It is noteworthy that recently, Bank of Guizhou also acquired three other banks—Panzhou Wanhe Village Bank, Kaili Dongnan Village Bank, and Baiyun Dexin Village Bank—and converted them into branches. Why did Bank of Guizhou uniquely adopt a trust structure for Longli Guofeng Village Bank?
Furthermore, according to the latest data disclosed by Longli Guofeng Village Bank, its net profit for 2023 was -347,800 yuan. Given this profit pressure, how does Bank of Guizhou assess the收益 generated from the aforementioned trust plan beneficiary shares?
As of the time of writing, Bank of Guizhou had not responded to Caijing's inquiries on the above matters.
The entry of trusts into village bank reform.
According to information released by Bank of Guizhou, the deposit assumption agreement between the bank and Longli Guofeng Village Bank will take effect after the confirmation agreement is signed on January 12, 2026. The subject deposits and consideration are as follows: commencing from the assumption date, the debts and associated rights formed under the subject deposits of Longli Guofeng Village Bank will be assumed by Bank of Guizhou, with a final assumption price of 1.849 billion yuan.
The "Announceable Transaction" shows the payment terms: as the principal sponsoring bank, Bank of Guizhou assumes the deposits of Longli Guofeng Village Bank. The latter entrusts its asset收益权 to establish a trust plan, and Bank of Guizhou, using the creditor's rights formed from assuming Longli Guofeng's deposits, receives corresponding trust plan beneficiary shares to pay the consideration for assuming the deposits.
On January 8, 2026, Longli Guofeng Village Bank stated that, starting January 9, 2026, all its deposits would be assumed by Bank of Guizhou, which would fulfill the repayment obligations to protect the legitimate rights and interests of depositors.
Regarding business交割, Longli Guofeng Village Bank stated that Bank of Guizhou and Longli Guofeng Village Bank would conduct business交割 from 9:00 on January 9, 2026, to 24:00 on January 11, 2026. All business operations of Longli Guofeng Village Bank would be suspended starting from 17:00 on January 8, 2026.
"After the deposit business of Longli Guofeng Village Bank is transferred to Bank of Guizhou, the personal and corporate account numbers,开户行 information, etc., opened at Longli Guofeng Village Bank will change. Starting January 12, 2026, customers need to go to the corresponding Bank of Guizhou branches to conduct business. For loan customers of Longli Guofeng Village Bank, this assumption does not affect loan repayments. Bank of Guizhou will continue the automatic deduction service for loan principal and interest. Loan customers should ensure sufficient funds are deposited in their repayment accounts before the due date to avoid overdue payments," Longli Guofeng Village Bank reminded.
In fact, differences in the reform approach for Longli Guofeng Village Bank became apparent as early as December 2025. At that time, Bank of Guizhou stated that proposals for the "village bank to branch" reform—acquiring Panzhou Wanhe Village Bank, Kaili Dongnan Village Bank, and Baiyun Dexin Village Bank and establishing branches—were all approved. Regarding the reform plan for Longli Guofeng Village Bank, no specific model was discussed.
On January 8, 2026, the National Financial Regulatory Administration Guizhou Bureau approved the dissolution of Longli Guofeng Village Bank, without mentioning terms like "absorption and merger."
Risk transformation rather than resolution.
"The core innovation of introducing the trust structure design lies in the dual breakthrough of non-cash交割 and precise risk isolation. Swapping creditor's rights for trust beneficiary shares avoids large cash outlays for the principal sponsoring bank while achieving the isolation of non-performing assets from the balance sheet through the independence of trust property, constituting a new disposal model of 'no cash, no consolidation'," said Zeng Gang, Deputy Director of the National Institution for Finance & Development. He noted the cleverness lies in moving beyond the traditional framework of "equity merger & acquisition + cash assumption," allowing for rapid assumption of deposit debts without complex equity negotiations.
Zeng Gang stated that this model directly addresses three major pain points in small and medium-sized bank reform: alleviating capital replenishment pressure by avoiding the liquidity drain of cash assumptions; solving the problem of low efficiency in non-performing asset disposal by enabling centralized asset management through the trust; and circumventing integration deadlocks caused by complex equity structures, providing a path for principal sponsoring banks with minority stakes to fulfill their responsibilities.
Compared to large state-owned banks and national joint-stock banks, small and medium-sized banks face greater pressure regarding their capital adequacy ratios. Regulatory data shows that as of the end of the third quarter of 2025, the capital adequacy ratios of city commercial banks and rural commercial banks were 12.40% and 13.20% respectively, both below the average level of 15.36% for commercial banks.
Additionally, although Longli Guofeng Village Bank was initiated by Bank of Guizhou, Bank of Guizhou holds only a 25.36% stake and does not have controlling interest. In several recent village bank reforms, disagreements among shareholder banks of acquiring institutions have occurred frequently.
For example, in mid-January 2026, although the "Proposal on the Absorption and Merger of Jiangsu Zhangjiagang Yurun Village Bank and the Establishment of Branches" by Suzhou Rural Commercial Bank was reviewed and passed, it faced approximately 13.08% dissenting votes and 0.95% abstentions.
Another example occurred on November 26, 2025, when the "Proposal on Guiyang Bank's Planned Acquisition of Xifeng Fazhan Village Bank to Establish a Branch" by Guiyang Bank was passed, but the proportion of dissenting votes was 19%.
Zeng Gang also believes that the essence of introducing the trust structure is the transformation and deferral of risk形态, not its complete resolution. Although the trust isolates the risk from direct transmission onto the principal sponsoring bank's balance sheet, the underlying asset risk remains linked to the specific bank through the beneficiary shares.
"For the specific bank, the core challenges include three aspects: First, the underlying trust assets are mostly existing loans of the village bank, which have long disposal cycles and high recovery uncertainty, potentially leading to a devaluation of the beneficiary rights. Second, trust beneficiary shares lack a public trading market, making them illiquid and difficult to monetize quickly. Third, the bank must bear the ultimate deposit repayment responsibility. If asset returns fall short of expectations, it could create implicit liquidity liabilities, while potentially facing regulatory requirements for risk-weighted asset provisioning, consuming capital adequacy ratio," Zeng Gang said.
As of Caijing's press time, Longli Guofeng Village Bank had not yet published its annual financial data for 2025 or 2024. According to its disclosures, its net profit for 2023 was -347,800 yuan.
Since the underlying trust assets are mostly existing loans of the village bank, what issues need attention during implementation? Yang Xiang stated that, first, is the legal主体资格 for ownership confirmation and recovery: Although the收益权 is transferred to the trust, the nominal creditor might still be the original bank entity. In practice, it must be clear who has the right to sue the debtors—the trust company or the assuming bank. This usually requires配合债权转让通知或诉讼主体资格的让渡安排; otherwise, procedural flaws leading to "winning the lawsuit but not collecting the money" can easily occur.
Second, is the authenticity and valuation of the underlying assets: Village bank loans often suffer from insufficient collateral and不规范 procedures. Before establishing the trust plan,穿透式的尽职调查 must be conducted. If the underlying assets are themselves fictitious or completely unenforceable, the so-called "consideration" effectively becomes a unilateral donation by the assuming bank.
Can the new model be replicated?
Currently, reforms of village banks大致分为以下几种: First, dissolution, achieving market exit, and清零 all deposit and loan businesses, or having all business, property, creditor's rights, debts, and other rights and obligations assumed by an absorbing bank. Second, restructuring the village bank into a branch of another type of bank. Third, increasing the shares held by the principal sponsoring bank in the village bank.
Since 2025, the pace of integration among small and medium-sized banks has significantly accelerated. The Central Economic Work Conference held at the end of that year explicitly called for further reducing the number and improving the quality of small and medium-sized financial institutions.
Will "entrusting asset收益权 to establish a trust plan" be increasingly used in achieving the reduction targets for banks? Xue Hongyan expressed that this model possesses a certain degree of replicability, but its applicable conditions are relatively strict, making it difficult to become a universal solution. Successful implementation requires several key prerequisites: the target village bank must have a sufficient scale of credit assets with clear ownership that can generate stable cash flow; the principal sponsoring bank must possess strong capital strength, risk control capabilities, and the willingness to履行最终责任; and it requires the understanding and support of local regulators to achieve efficient compliance approval.
"Therefore, this model is more suitable for specific cases where asset quality is relatively controllable and the asset-liability structure is reasonably matched, providing a valuable intermediate path for disposing of institutions that are 'unsuitable for direct merger but require urgent risk隔离'. However, for institutions with severely deteriorated assets, traditional methods like equity重组, asset acquisition, or market exit remain necessary choices. In the future, risk disposal for village banks is expected to maintain a differentiated pattern of 'one plan per institution,' and this case adds an important market-based tool to the options," Xue Hongyan stated.
Zeng Gang holds a more optimistic view. He stated that the internal and external conditions for implementing the new model are成熟: Externally, regulators encourage market-based, rule-of-law risk resolution, policies clarify the compliance of bank债权转让, and the application ecosystem for trust tools is increasingly完善. Banks possess credit背书 and asset control capabilities, and village bank asset收益权 have the basis for being packaged.
Furthermore, in Zeng Gang's view, the fundamental motivation for trust companies to participate lies in转型需求 and business opportunities: breaking reliance on traditional channel businesses,切入监管支持的风险处置赛道, and broadening non-standard business scenarios; obtaining stable service fee income through professional asset verification and management; and leveraging bank credit背书 to reduce project risk while accumulating experience in special asset disposal to enhance differentiated competitiveness.
In January 2025, a notice from the General Office of the State Council forwarding the National Financial Regulatory Administration's "Several Opinions on Strengthening Supervision, Preventing Risks, and Promoting the High-Quality Development of the Trust Industry" indicated that trust companies should base themselves on the trustee's定位, follow laws, regulations, and regulatory requirements, ensure trust purposes are legal and compliant, handle trust affairs for the maximum benefit of the beneficiaries, and fulfill the受托责任 of honesty, trustworthiness, diligence, and尽责. It emphasized leveraging the functional advantages of the trust mechanism, such as property independence and risk isolation, to guide the standardized and healthy development of asset service trusts, asset management trusts, and public welfare慈善 trusts.
Yang Xiang stated that the new model is also a financial engineering solution that "trades time for space." That is, through the trust structure, the transferee first takes over the transferor to ensure deposit safety and social stability, and then gradually消化 those non-performing assets over the long trust period.
