China’s top financial regulator reported a sharp decline in the number of legal-entity financial institutions in 2025, led by the elimination of 670 rural small and midsize banks, reports Caixin. The came as authorities pressed ahead with a broad sector overhaul.

The National Financial Regulatory Administration said on Friday that the number of legal-entity financial institutions fell by 711 from the end of 2024 to 6,489 at the end of 2025. Rural small and midsize lenders accounted for most of the decline, with their ranks shrinking 18.6%. Numbers in other categories were largely unchanged, aside from the disappearance of one city commercial bank, one direct bank and eight nonbank financial institutions.The consolidation underscores Beijing’s escalating effort to contain risks in the country’s fragile regional banking system through mergers and acquisitions, creating larger and better-capitalized institutions to help withstand economic pressure

Deutsche Bank said on Monday it had been named by China as a clearing ​bank for its currency, the renminbi, in a ‌first for a European lender, reports Reuters.

“Deutsche Bank will facilitate direct end-to-end processing, clearing and settlement services for cross-border RMB transactions for European financial institutions and businesses, acting as a local bridge to China’s payment systems,” the bank said.

The move gives European businesses and financial institutions direct access to China’s onshore financial system, including capital markets and liquidity infrastructure, streaming cross-border trade and investment flows.

China’s “big four” state-run banks are the largest in the world in terms of asset scale, reports the South China Morning Post. This underscores Beijing’s rising ambitions to build the country into a global financial powerhouse.

The ranking released by The Banker magazine on Wednesday was topped by the four Chinese banks–Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China and Bank of China–with JPMorgan Chase following in fifth place.

In total, Chinese banks made up seven of the top ten in the ranking, which lists global banks in terms of tier-one capital size. All seven of them are controlled by the Chinese government.

China’s top auditor has accused one of the country’s biggest state-owned banks of exploiting investment fund structures to evade billions of RMB in taxes, reports the South China Morning Post. This comes as Beijing steps up efforts to strengthen financial compliance.

Bank of China evaded RMB 2.37 billion yuan ($348 million) in taxes by misusing preferential treatment intended for publicly offered mutual funds between April 2023 and August 2025, according to the National Audit Office’s annual report.

The bank channelled investments through two affiliated financial institutions and recruited large numbers of employees as nominal investors, each contributing between RMB 1 and RMB 100, to disguise 11 privately offered funds as public ones, the report said.

China’s bank wealth management products (WMP) have shrunk by RMB 1.38 trillion ($200 billion) in the first quarter, reports Caixin. This comes as banks prioritized deposit growth and market volatility weighed on flows. 

Bank WMP balances fell to RMB 31.91 trillion at the end of March from the end of last year, according to data from China Wealth (Asset) Management Registry and Custody, though still up 9.5% from a year earlier. The firm is a state-owned industry registry.

Despite signs of a rebound in April, asset allocation for WMPs remains a challenge. Falling short-term bond yields and deposit rate cuts have constrained returns, leaving managers with limited higher-yielding assets, industry insiders say.