China ramped up its policy of consolidating small banks via mergers, takeovers or deregistration last year in a bid to reduce risks in its banking system, according to a report by the South China Morning Post on Friday January 17.
A total of 162 small banks were merged, dissolved or deregistered in 2024, which it said was four times the number in 2023 and seven times the total in 2022.
China had some 3,912 small banks at the start of last year, according to the latest financial stability report from the People’s Bank of China, it said, but experts say they often face financial instability because of weaker funding profiles and higher exposure to risky sectors such as property development.
Pressure to consolidate small banks has risen because China’s economy is slowing and smaller institutions face weaker state finances, plus deteriorating asset quality and profitability, as well as deep-rooted issues in governance and operations.
Those factors raised concerns in Beijing about potential risks spreading within the banking sector.
Read the full report: South China Morning Post.
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