Speed up the reform and restructuring of small and medium-sized financial institutions!
The Chinese reporter of the securities firm noticed that recently many village banks were acquired by the sponsor bank and will be converted into parent bank branches, and the village banks involved are mainly distributed in Heilongjiang, Chongqing, Guangdong and Beijing. This also means that these village banks will be dissolved after the sponsor banks complete the acquisition and undertake all their assets, liabilities, rights and obligations.
Compared with previous years, there has been a significant increase in the number of cases of village banks being changed into sub branch outlets by the parent bank or the sponsor bank since this year. According to incomplete statistics, there have been at least 6 village bank reform cases that have been approved by the regulator or the parent bank has issued acquisition plans during the year. According to the analysis of the Chinese reporter of the securities firm by the industry researchers, this method of merger by the sponsor bank is conducive to the rapid integration and transformation of the transformed business and roles, and can also effectively reduce the operating costs.
Five more village banks will be disbanded
On April 12, the official website of the State Administration of Financial Supervision disclosed that the local regulatory branch had agreed to the acquisition of Chongqing Jiangbei Hengfeng Rural Bank, undertake all its assets, liabilities, rights and obligations, and establish Chongqing Dashiba Sub branch of Hengfeng Bank.
The regulatory authority said that Evergreen Bank should complete the acquisition in accordance with the requirements of relevant laws and regulations, do a good job in the handover of institutions, businesses, systems and personnel, and urge Chongqing Jiangbei Hengfeng Rural Bank Co., Ltd. to handle the dissolution of legal person institutions and other related matters as required.
According to the 2023 annual report of Hengfeng Bank, Chongqing Jiangbei Hengfeng Rural Bank was established in March 2011 with a registered capital of 313.84 million yuan, and the shareholding ratio of Hengfeng Bank was 84.39% at that time. The annual report of Hengfeng Bank revealed that on December 22 last year, the extraordinary shareholders' meeting held by the bank voted to resolve the risk of the village bank by means of acquisition and establishment. As of the end of March this year, the bank had spent 719300 yuan to acquire some minority shareholders' equity, and had held 91.72% of the former's equity after the completion of the transaction.
In fact, this is the fourth "village to branch" administrative permit approved by the regulatory authority since April.
On April 7, the Shuangyashan Supervision Branch of the State Financial Supervision Administration issued two administrative permits in a row, agreeing Longjiang Bank to acquire Jixian Runsheng Rural Bank and Keshan Runsheng Rural Bank, and set up Longjiang Bank Shuangyashan Jixian Sub branch and Qiqihar Keshan Sub branch respectively.
As early as January this year, Longjiang Bank has announced the absorption and merger of the above two rural banks. Longjiang Bank said this was "to integrate the operating resources of subsidiaries and optimize the layout of institutional outlets". After absorption and merger, it was transformed into a branch at the original location. All the debts, responsibilities and obligations of these villages and towns were inherited by Longjiang Bank.
On April 2, the Guangdong Supervision Bureau of the State Administration of Financial Supervision disclosed that Guangdong Nanyue Bank was approved to acquire Nanyue Village Bank in Zhongshan Ancient Town and set up Zhongshan Branch of Guangdong Nanyue Bank. According to the approval documents, Nanyue Bank has transferred three corporate shareholders and three natural person shareholders with a total of about 30.8% of the total share capital. Subsequently, Nanyue Bank has fully owned this village bank. After the completion of the acquisition, Bank of Nanyue undertook all its assets and liabilities, institutional outlets, rights and obligations, and dissolved the village bank.
besides, Bank of Beijing The announcement of the resolution of the Board of Directors disclosed on April 11 showed that the Board of Directors of the Bank unanimously approved the Proposal on the Acquisition of Beijing Yanqing Rural Bank to Establish Branches. According to the annual report of BOB, the bank holds 33.33% of the shares of Yanqing Rural Bank, whose total assets at the end of last year were 1.228 billion yuan, and the net profit in 2023 was 5.098 million yuan.
In addition, village banks have been disbanded this month after completing the clearing work. On April 8, Huaxia Bank The liquidation group of Beijing Daxing Huaxia Rural Bank issued a statement that the bank's shareholders had decided to dissolve the bank and the liquidation had been completed after regulatory approval. The bank completed the cancellation of registration with the company registration authority on April 1. In November last year, the regulator approved Huaxia Bank to acquire the bank and turn it into two branches of Huaxia Bank.
The reorganization of rural banks was launched in an all-round way
In fact, it has become an important path for the reform and restructuring of rural banks to absorb and merge through the main originator bank, and the transformation of rural banks into subordinate branches after being absorbed and merged by the originator bank has also become one of the ways to encourage and support multi departments from top to bottom.
At the end of January this year, the State Administration of Financial Supervision mentioned in the work summary of 2023 that the restructuring of rural banks was fully launched. Since 2023, many rural banks in China have been merged by the main originator or other rural banks. The above work summary also indicates that preventing and resolving financial risks requires solving difficult problems in reform and resolving risks in development.
The Supervision Department of Small and Medium Rural Banks of the State Administration of Financial Supervision also said in January this year that it is necessary to steadily and prudently promote the structural restructuring of rural banks and improve the management ability of the main development bank. Strengthen the supervision of corporate governance of rural banks, improve the shareholding ratio of the main development bank, and establish a corporate governance mechanism led by the main development bank.
Zhou Yiqin, a senior financial policy researcher and the founder of Guantiao Consulting, said that "village to branch" is a relatively simple way to resolve risks when analyzing the Chinese reporters of securities companies. Generally, the main originator bank carries out absorption and merger. Its advantage is that its corporate culture and management mode are relatively close. In the future, the business integration and role transformation will also be faster after the village bank is transformed into a branch, and the operating cost can be effectively reduced. In addition, if the main originator bank has no other branch in the place where the village bank is located, it is equivalent to an additional business license for non local operation, It is also conducive to new business expansion.
"Of course, on the other hand, the 'village to branch' also needs the main development bank's own healthy operation, good business continuity, and spare power and ability to participate in the risk resolution of village banks, so the use of 'village to branch' also has certain limitations." Zhou Yiqin said.
There are still difficulties to be broken through in the practice of "village to branch"
By the end of June last year, the number of rural banks in China had reached 1642, accounting for about 36% of the total number of banking financial institutions in the country.
In a large number of rural banks, the ownership structure of each bank is also different. This also means that some rural banks may have differences and difficulties in the actual operation of reforming insurance and being absorbed and consolidated by the main originator bank to become a branch of the originator bank.
Li Yuanyuan, a lawyer from Jindu Law Firm, and others mentioned the differences in the practice of village banks' merger and consolidation and the difficulties they may face in practice in the article "Can the simple merger provisions become the ice breaker for village banks' merger and consolidation?" written in January this year.
According to the above article, the mode of the sponsor bank acquiring rural banks to set up branches is different from the stock exchange merger between urban commercial banks or between small and medium-sized rural banks, and usually includes two ways: acquisition first and then merger, and merger and acquisition parallel.
Under the mode of acquisition first and then merger, it means to acquire all the equity of the remaining shareholders of the village bank and turn them into wholly-owned subsidiaries; In the parallel absorption and merger mode, more than two-thirds of all voting shareholders of the village bank passed the proposal and signed the acquisition agreement with other shareholders.
However, in the current practical operation, commercial banks will generally face two difficulties in absorbing and merging rural banks: first, in the process of acquiring the equity held by other shareholders, once one shareholder does not agree to transfer its shares, the acquisition will be convenient and cannot complete the absorption and merger; Second, the acquirer may not be able to pass the proposal on the absorption and merger of rural banks when holding the general meeting of shareholders without holding 100% of the equity of rural banks, resulting in the inability to complete the absorption and merger.
However, Li Yuanyuan and other lawyers also mentioned that the new version of the Company Law of the People's Republic of China, which will come into force on July 1, 2024, has added a simple merger procedure, that is, companies with more than 90% of shares are merged, and the merged companies do not need to be resolved by the shareholders' meeting; If the price paid does not exceed 10% of its net assets, a resolution of the board of directors may be adopted without a resolution of the shareholders' meeting.
The above article believes that in the process of "village to sub branch", it may face practical difficulties that small shareholders do not cooperate. After commercial banks acquire 90% of the shares of village banks, they can consider adopting the simple merger procedure of the new company law to complete the absorption and merger of village banks. In addition, another innovation of the new company law is to simplify the internal approval procedures of the acquirer for the merger and acquisition under specific circumstances.
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