In the past two years, the life of the bank has not been as good as before, the performance has declined, the bonus has inevitably decreased, and some small banks have not been able to hold on, and even have to terminate business or announce their dissolution.
According to the data released on the official website of the State Administration of Financial Regulation, as of December 26, 2023, 13 banks have announced their dissolution in December.
On December 5, the Hainan Supervision Bureau of the State Administration of Financial Supervision issued an approval on the dissolution of Zhongshu Rural Mutual Fund Cooperative in Yacheng Town, Sanya City, and a reply on the dissolution of Longtan Rural Mutual Fund Cooperative in Jiazi Town, Haikou City.
On December 11, the Hebei Supervision Bureau issued a reply on the dissolution of Jinzhou Hengsheng Village Bank Co., Ltd. and the approval of the dissolution of Gaocheng Hengsheng Village Bank Co., Ltd.
On December 15, the Inner Mongolia Supervision Bureau issued a reply on the dissolution of Inner Mongolia and Lingel Mengshang Village Bank.
On December 21, the Xinjiang Supervision Bureau of the State Administration of Financial Supervision issued eight replies to the dissolution of banks, including Xinjiang Shaya Rural Commercial Bank Co., Ltd., Xinjiang Awati Rural Commercial Bank Co., Ltd., Baicheng County Rural Credit Cooperative, Xinjiang Wushi Rural Commercial Bank Co., Ltd., Xinjiang Aksu Rural Commercial Bank Co., Ltd., Xinjiang Wensu Rural Commercial Bank Co., Ltd., Kuqa County Rural Credit Cooperative, and Xinhe County Rural Credit Cooperative.
Judging from the 13 banks that have been dissolved, they are mainly small-scale local banks, mainly village and township banks, rural mutual fund cooperatives, rural commercial banks, and credit cooperatives.
After seeing the dissolution of these banks, I believe that the majority of depository users are very curious, if the banks are dissolved, what will happen to their deposits in these banks?
Let's take a look at how to dispose of deposits when a bank is dissolved.
First of all, we must make it clear that the dissolution of the bank and the bankruptcy of the bank are two different things, the bankruptcy of the bank means that the bank does not exist at all, and it is necessary to go through the legal procedure to auction all the assets of the bank, and the auction proceeds are used to repay the user's deposit, so that some users' deposits may be lost, which is a passive closure.
Before dissolution, the bank will definitely properly handle the user's deposits and loans, and need to report to the regulatory authorities, and will only be dissolved with the permission of the regulatory authorities.
In practice, banks generally transfer their business to other banks before they are dissolved, for example, in the banks that were dissolved in December, the deposit and loan businesses of the banks were basically merged into other banks.
Judging from the announcements issued by the regulatory authorities, after these banks are absorbed and dissolved, all the business of the banks, including property, creditor's rights, debts and other rights and obligations, will be inherited by other banks.
This means that even if the bank is dissolved, there will be no impact on all users, users' deposits and loans will still exist, the previous deposits will still be valid, and the interest will be calculated normally.
However, after the dissolution of the original bank, the original branch may be changed to a new bank branch or merged into another branch after closing, so that the user needs to go to the new bank branch to handle the business.
Some banks may retain the account name and account number of the original bank, and after the dissolution of some banks, the user may need to cooperate with the new bank to carry out deposit transfer processing, which depends on the actual situation of the bank.
Again, why do so many banks dissolve so frequently?
In the past few decades, under the background of the rapid economic development of the mainland, the development of the banking industry in the mainland has also been in full swing, and the number of legal entities of banks in the mainland has reached more than 4,000 and hundreds of thousands of outlets.
Moreover, in the past ten years, many banks have been expanding, and there are more and more bank branches, especially these small banks in order to pursue the expansion of scale, they do not hesitate to expand the scale of business by absorbing deposits at high interest rates and relaxing the threshold of loans.
This kind of expansion was very prosperous when the overall environment was relatively good, and the profit growth was very fast, but in recent years, when the overall global economic situation is not very optimistic, the demand for social financing has slowed down, especially the financing of small and medium-sized enterprises.
This change has at least two implications for small banks.
The first is the narrowing of interest margins and the reduction of profits.
Under the background of relatively abundant liquidity in the current market, the interest rate spread of banks is getting narrower and narrower, and the loan interest rate of many large banks is also relatively low, the threshold is also relaxed, and the space for customers to choose is relatively large, so the business of small banks is becoming more and more difficult, and profits are also facing great challenges.
The second is the increase in the bad debt rate.
In the past few years, many small banks have expanded one-sidedly, and many asset quality is relatively poor, and this blind expansion has begun to show negative results in the last two years.
Nowadays, many small enterprises are not having a good time, so many corporate loans cannot be repaid normally after expiration, which directly leads to the rapid rise of bad debts of some small banks, and the non-performing rate of many small banks has reached more than 5%, or even more than 10%.
In order to solve this bad debt rate, many local regulatory authorities have actively guided these small banks, and the regulatory departments of small banks with relatively large potential risks have also intervened in a timely manner.
The merger of small banks is actually a good thing for the mainland banking industry, which can reduce disorderly competition in the banking industry and improve the efficiency of the banking industry and its ability to serve the economy as a whole.