(Yicai) July 31 -- More than 60 small- and medium-sized lenders were dissolved or merged in China in the past two months, according to incomplete statistics from the National Financial Regulatory Administration.

Twenty-five legal entities in Henan province, including Henan Rural Commercial United Bank, which was established last November, will merge to form Henan Rural Commercial Bank, according to an announcement released on July 28.

At the end of last month, Liaoning Rural Commercial Bank received the regulatory approval to incorporate and consolidate Liaoning Xinmin Rural Commercial Bank and 35 other small- and medium-sized rural lenders. In early June, China Minsheng Bank was given the nod to acquire Meihekou Minsheng Rural Bank and set up a branch institution.

The NFRA announced in a bulletin on June 28 the dissolution of Zhejiang Daishan Chouzhou Village Bank and Zhejiang Zhoushan Putuo Chouzhou Rural Bank.

Regulators encourage consolidations and restructurings among small- and medium-sized rural banks because they face difficulties, such as insufficient profitability, weak assets, and supplementing capital restrictions, said Liu Chengxiang, chief banking analyst at Kaiyuan Securities.

The People's Bank of China listed 337 high-risk banking institutions in the China Financial Stability Report 2023 released at the end of last year. Of them, 191 were rural cooperative banks, and 132 were village and township banks, accounting for 96 percent of the total. A total of 4,364 lenders were assessed in the report.

Risks among village and township banks are higher, according to a banking analyst in southern China. Larger ripple effects are more likely to occur if lower-level banks go bust, the analyst said, adding that encouraging banks' mergers and restructurings can lower adverse impacts from risk exposure.

Even if the operating problems of the lenders are not significant, they may still merge because of the requirements of the regional financial reform and to form financial synergies, Liu noted.

Small- and medium-sized banks are urban commercial banks, rural commercial banks, rural cooperative banks, rural credit cooperatives, and village and township banks.

Editors: Xu Wei, Futura Costaglione