China Financial Regulator: 711 Fewer Legal Entities, Rural Banks Down 670; Sichuan NPL Ratio 2.65%

The National Financial Regulatory Administration's latest list of financial institutions shows that, as of end-2025, a total of 6,489 legal entities were under its supervision and that of its local offices, a decrease of 711 from end-2024. The change was concentrated in rural small and medium banks, while the number of other types of institutions remained broadly stable. Among them, rural small and medium banks decreased by 670 from end-2024, a decline of 18.6%. The central government has repeatedly called for deepening the reduction in quantity and improvement in quality of small and medium financial institutions. The related reforms aim to orderly clear structural risks, and through capital replenishment, improved governance, strengthened risk management and capacity building, enhance the soundness and service levels of these institutions.

Taking Sichuan as an example, since 2021, the province launched a new round of rural credit cooperative reform. From 2022 to 2024, at a pace of two per year, it piloted the establishment of six city-level unified-legal-person rural commercial banks in Leshan, Bazhong, Ya'an, Deyang, Nanchong and Dazhou. Upon completion of the relevant reforms, Sichuan will achieve a '1+20' legal-entity structure for the Sichuan Rural Commercial Bank Union system, becoming the first in the country to achieve the goal of 'all prefecture-level city rural commercial banks' (excluding the provincial capital).

During the reform process in Sichuan, RMB 18.7 billion in non-performing loans were disposed of, and the overall NPL ratio was reduced from 3.48% to 2.65%, a decrease of 0.83 percentage points from before the reform. The total number of legal entities decreased by 74, and by 2022, high-risk institutions were fully cleared. The city-level rural commercial banks, through absorption and merger of county-level rural commercial banks, introduced capital from the Sichuan Rural Commercial Bank Union and high-quality state-owned enterprises in the prefecture-level cities, raising RMB 13.7 billion in share subscription funds. The average paid-in capital increased from RMB 1.2 billion to RMB 3.6 billion, and 13 institutions saw their asset scale exceed RMB 100 billion. The six reformed institutions had an average capital adequacy ratio of 13.01%, up 0.91 percentage points from before the reform; the average provision coverage ratio was 172.77%, up 20.56 percentage points. After the reform, the NPL ratio of newly issued loans by the city-level rural commercial banks was controlled within 1%.