Northeast China’s Liaoning province plans to merge 12 local city commercial banks to contain financial risks amid a deteriorating economy affected by the pandemic, reported Caixin.
The provincial government said it plans to merge the 12 institutions to create a “first-class urban commercial bank” that has a “clear shareholding structure, abundant capital adequacy, tight internal risk control and fine governance.” Strategic investors including the state-owned Liaoning Financial Holding Group and central bank’s deposit insurance fund will be invited to take part in the restructuring, the government said.
The provincial government didn’t elaborate on which banks will be involved in the restructuring. But Caixin reported that they are the smaller ones among the province’s 15 city commercial banks with less than RMB 200 billion ($30.8 billion) of total assets each.
Liaoning’s move followed the central government’s call to encourage smaller banks to boost capital and promote consolidation in the sector to counter rising bad loan risks among small regional lenders.