Small and medium-sized financial institutions are an important component of the financial industry, playing a vital role in stabilizing the macroeconomy, serving private and micro-enterprises, and supporting rural revitalization. The Central Economic Work Conference proposed "further promoting the reduction of the number and improvement of the quality of small and medium-sized financial institutions," setting clear tasks for next year's economic and financial work.
Risk prevention and control is a perpetual theme in financial work, and the prudent handling of risks in small and medium-sized financial institutions is of paramount importance. In recent years, key regions in my country have formulated reform and risk mitigation plans for small and medium-sized financial institutions on a province-by-province basis, steadily advancing these plans through a combination of methods including mergers and acquisitions, online remediation, and market exit. Data from the State Financial Regulatory Commission shows that as of the end of June this year, there were 4,070 legal entities in my country's banking financial institutions, a decrease of 225 from the end of 2024 and a decrease of 534 from the end of the 13th Five-Year Plan period. The reduction is mainly in small and medium-sized banks.
Currently, both the number of high-risk institutions and the scale of high-risk assets have been significantly reduced from their peak, and their proportion in the financial system is relatively small. The risks are completely controllable, and a considerable number of provinces have achieved "dynamic zeroing" of high-risk small and medium-sized institutions.
"With the rapid disposal of high-risk small and medium-sized financial institutions, it is necessary to further promote the reduction of quantity and improvement of quality," said Lou Feipeng, a researcher at China Postal Savings Bank. He explained that the reduction of quantity is not simply about shutting down institutions, but about orderly clearing out high-risk and inefficient institutions through market-oriented and rule-of-law means to enhance the stability of financial institutions; while the improvement of quality requires integrating resources and strengthening risk control to enhance the sustainable operation capabilities and high-quality service capabilities of institutions.
In recent years, my country has accelerated the reform and transformation of small and medium-sized financial institutions, improved corporate governance, and enhanced their sustainable development capabilities. The reform of rural credit cooperatives has progressed steadily, with more than half of the provinces establishing provincial-level legal entities; the reform and restructuring of city commercial banks has been implemented in an orderly manner, and the high-quality development of joint-stock banks has been steadily promoted; insurance, asset management, and other institutions are accelerating their return to their core functions, and their functional positioning is continuously strengthening.
"Next year marks the start of the '15th Five-Year Plan,' and a good start means promoting both qualitative and quantitative improvements in the economy, which places higher demands on financial services," said Lou Feipeng. He added that small and medium-sized financial institutions should focus on reducing quantity and improving quality, on the one hand, by continuing to improve internal governance and enhance risk management capabilities; and on the other hand, by promoting localized and specialized operations to better serve the real economy.
The State Financial Regulatory Commission stated that, going forward, it will firmly fulfill its primary responsibility for risk prevention and control, focus on resolving existing risks, resolutely curb new risks, and strictly adhere to the bottom line of preventing defaults. It will consolidate and expand the achievements of risk mitigation through reform, and further promote the reduction and improvement of the number of small and medium-sized financial institutions.
