1 hr ago

China Consolidates Banks as 670 Lenders Disappear

China’s banking shake-up: 670 lenders vanish as Beijing moves to contain financial risks · livemint.com

China is combining or closing many of its smaller banks.

A record 670 lenders disappeared in 2025, according to Fitch Ratings.

The government says these changes can improve supervision and help stronger banks handle losses.

Rural banks have less profit and more unpaid loans than the banking industry overall.

They lend to local businesses and may also be exposed to property companies and local government borrowers.

Slower economic growth can make it harder for these borrowers to repay.

Fitch says problems at smaller banks are unlikely to spread widely through the banking system.

Still, merging banks does not automatically fix their financial problems.

Key facts

Lenders disappeared in 2025: 670, about one-quarter of China’s banks, according to Fitch Ratings analysis.
Rural-bank return on assets: 0.45% in the first half of the year, down from 0.56% in 2021.
Rural-bank non-performing loan ratio: 2.8%, compared with a 1.5% average for China’s banking industry.
Economic growth: China’s economy expanded 4.3% in the second quarter, its weakest pace since 2022.
Industrial profits: Increased 4.2% annually in August, the slowest pace recorded that year.
Fitch’s assessment: Small and rural commercial banks remain the weakest part of the system; stress is unlikely to cause broad financial contagion.

livemint.com · 1 hr ago