China has significantly ramped up the pace of rural bank consolidation in the first half of 2025, nearly matching the total number of mergers seen in all of last year. The move is part of a broader strategy aimed at reducing systemic risk and improving the resilience and service quality of rural financial institutions.
According to newly released figures from the National Financial Regulatory Administration, 89 rural and township banks were merged or absorbed by other lenders between January and June 2025. This figure compares with 94 such consolidations recorded across the entirety of 2024 and just 11 the year before.
A common mechanism behind these mergers is the integration of rural banks by the institutions that originally helped establish them—often regional commercial banks, with occasional involvement from state-owned giants. For example, Industrial and Commercial Bank of China (ICBC) recently received regulatory approval to convert its wholly owned rural subsidiary in Chongqing into a local branch, effectively streamlining its governance and operations.
Other consolidation strategies include majority stake acquisitions by dominant shareholders. Earlier this year, Langfang Bank secured approval to purchase the remaining shares of Luanping Shengyang Rural Bank, allowing it to fully absorb the entity into its operations.
Industry experts point to fragmented ownership and weak governance structures as longstanding vulnerabilities in the rural banking sector. “Merging into larger, better-capitalized banks helps address poor risk controls and enhances operational oversight,” said one banking professional familiar with the matter.
Analysts believe that these reforms, while reshaping the rural banking landscape, are unlikely to diminish financial access in underbanked areas. “The consolidation is not about reducing rural services—it’s about improving them and ensuring stability,” said Yang Haiping, a researcher at the Beijing Wealth Management Industry Association.
Once integrated, the rural banks are expected to benefit from stronger risk management systems, improved governance, and access to broader product suites and resources. Yang added, “This wave of restructuring not only helps resolve existing vulnerabilities but also strengthens the overall financial architecture in China’s rural economy.”
