Six Xuzhou Rural Commercial Banks "Merge," Plan to Form New Rural Commercial Bank; Another Move in Mid-Size Banks' "Reduce Quantity, Improve Quality" Strategy

Recently, six rural commercial banks in Xuzhou City, Jiangsu Province, announced simultaneously: they plan to establish a new “Jiangsu Xuzhou Rural Commercial Bank Co., Ltd.” (hereinafter referred to as Jiangsu Xuzhou Rural Commercial Bank) through a new merger. This means that the six legal entities—Xuzhou Rural Commercial Bank, Xinyi Rural Commercial Bank, Feng County Rural Commercial Bank, Suining Rural Commercial Bank, Pizhou Rural Commercial Bank, and Pei County Rural Commercial Bank—will merge. This plan is another key step in deepening reform within Jiangsu’s rural credit system, marking the transition from provincial-level joint banks to substantial city-level integration, and providing a regional model for nationwide small and medium-sized banks to “reduce quantity and improve quality.”

According to reports, this merger adopts a “completely new establishment” model rather than the common “absorption merger.” Media reports on the Jiangsu Xuzhou Rural Commercial Bank shareholders’ meeting proposal indicate that the new bank plans to fully inherit all assets and liabilities of the six institutions. If subsequent regulatory approvals proceed smoothly, Jiangsu Xuzhou Rural Commercial Bank will become the second city-level unified legal entity rural commercial bank in Jiangsu Province after Jiangnan Rural Commercial Bank, filling a gap in northern Jiangsu in this model.

This move occurs amid a broader push to improve the quality and reduce the scale of small and medium-sized financial institutions. Li Yunze, Director of the China Banking and Insurance Regulatory Commission, emphasized multiple times in 2025 the need to steadily and orderly promote mergers, acquisitions, and restructuring of small and medium-sized financial institutions to reduce scale and improve quality. The merger plan of the six banks in Xuzhou is a response from Jiangsu’s rural credit system to top-level design, moving from provincial joint bank reform to deep integration of city-level institutions, aiming to solve the development difficulties of small, scattered, and weak county rural banks and to serve as a regional example for nationwide rural credit reform.

Completely New Establishment Merger: A One-Step Reform to Break County-Level Barriers

Unlike the common “big eat small” absorption mergers in the market, the proposal indicates that Xuzhou’s integration chooses a “completely new establishment” model. This means a new legal entity will be created after the merger, and the original six institutions’ legal statuses will be terminated. While not the first in rural credit system reform, applying this model at the city-wide level highlights the thoroughness and systemic nature of the reform.

Experts familiar with small and medium-sized bank reforms analyzed on March 12 that the core advantage of the completely new establishment merger is its ability to fundamentally break down administrative and interest barriers between counties. In traditional absorption mergers, the surviving and merged entities often face friction and conflicts in management culture, system integration, and personnel placement, which can slow down the process or lead to “merging without integration.” A new establishment merger is like starting with a blank sheet of paper, facilitating the construction of a unified shareholding structure, corporate governance, risk control system, and technology platform from the outset, achieving “one step to full coverage” and avoiding historical baggage and internal consumption.

This approach is closely related to the current status of participating institutions.

Xuzhou Rural Commercial Bank, the leading entity in this integration, is itself a product of the previous reform. In September 2020, it was formed by merging three district-level rural commercial banks—Xuzhou Huaihai, Tongshan, and Pengcheng—with a registered capital of 3.732 billion yuan. After several years of development, by the end of the first half of 2025, its total assets had exceeded 108 billion yuan, making it the first in northern Jiangsu and the ninth in Jiangsu with assets over 100 billion yuan, accumulating valuable experience and a solid foundation for this larger-scale integration. This merger can be seen as a natural extension of Xuzhou’s rural financial reform from “city pilot” to “full city coverage.”

From an equity protection perspective, the proposal states that the new bank will inherit all debts and credits of the original institutions, ensuring the continuity and validity of depositors’ savings, customers’ credit lines, employees’ labor relations, and business contracts. This arrangement maximizes the protection of financial consumers’ rights and local financial stability, reducing market volatility during reform. Data shows that in the first half of 2025, Xuzhou Rural Commercial Bank’s operating income was 1.383 billion yuan, with a net profit of 193 million yuan, maintaining a stable operational foundation and providing financial resilience for the merger.

First Case of Provincial-Level Reform Implementation: From “Manager” to “Leader” in Collaborative Evolution

The merger of six banks in Xuzhou is also a key move in the deepening reform of Jiangsu’s rural credit system. Its top-level design and driving force come directly from the Jiangsu Rural Commercial Joint Bank, officially established in April 2025.

The Jiangsu Rural Commercial Joint Bank signifies a fundamental shift from the long-standing provincial association management model toward a market-oriented, corporate, licensed operation at the provincial level. The bank was jointly funded by Jiangsu Provincial Department of Finance and several Jiangsu provincial state-owned enterprises, with an initial registered capital of 7.7 billion yuan. It is explicitly designated as a Jiangsu provincial state-owned financial enterprise, responsible for industry governance and risk management of rural commercial banks across the province, and entrusted with managing the state’s financial capital in rural banks within Jiangsu. Hu Jianbin, Party Secretary and Chairman of the Jiangsu Rural Commercial Joint Bank, has written that this reform focuses more on development than risk mitigation, shifting the role from industry “manager” to “leader.”

In this context, city-level integration becomes a core strategy for the Jiangsu Rural Commercial Joint Bank to fulfill its “leader” role and build a new pattern of collaborative development. At the provincial rural commercial bank work conference in early 2026, the bank explicitly listed “deepening reform and innovation, and building a new pattern of collaborative development” as a key annual task.

The merger of the six banks in Xuzhou is also a proactive response and specific implementation of this provincial strategy.

Industry experts believe that Jiangsu’s reform path clearly reflects a new system concept of “provincial coordination, city-level collaboration, and county-level rootedness.” The provincial joint bank is responsible for top-level design, technological coordination, and risk prevention; city-level integration creates a unified legal entity, eliminates internal competition, and concentrates resources to serve regional economic development; counties serve as service terminals, maintaining market proximity and local advantages. The Xuzhou case demonstrates that after the provincial platform is established, the focus of reform is rapidly shifting to the city level, aiming to create city-level rural commercial banks as “flagships” to substantially enhance the competitiveness of the entire rural credit system.