Following the absorption and merger of several village banks by Henan Rural Commercial Bank and Zhongyuan Bank, Bank of Zhengzhou has now joined the reform initiative for rural banks in Henan province.

Recently, Bank of Zhengzhou announced plans to acquire Junxian Zhengyin Village Bank and restructure it as a branch. The bank has established seven village banks, and prior to this acquisition, it had increased its stakes in two others.

In recent years, Henan has been progressively reforming its village banking sector. Henan Rural Commercial Bank absorbed five village banks in two phases, while Zhongyuan Bank acquired four and converted them into branches. Before acquiring Junxian Zhengyin Village Bank, Bank of Zhengzhou spent 348 million yuan in 2023 to increase its stake in Zhongmu Zhengyin Village Bank.

**Bank of Zhengzhou Consolidates Village Banks** Bank of Zhengzhou recently disclosed plans to acquire the remaining 49% stake in Junxian Zhengyin Village Bank via cash payment and merge it into its branch network. Upon completion, the bank will assume all assets, liabilities, operations, and personnel of Junxian Zhengyin Village Bank, which will subsequently dissolve as a legal entity. Regulatory approval is pending.

Established in November 2017 with 100 million yuan in registered capital, Junxian Zhengyin Village Bank is one of seven village banks initiated by Bank of Zhengzhou between 2009 and 2017. Prior to the acquisition, Bank of Zhengzhou held a 51% stake.

Among these seven banks, Zhongmu Zhengyin Village Bank, operational for nearly 16 years, is the largest, with total assets reaching 16.691 billion yuan by the end of 2023.

Before the Junxian acquisition, Bank of Zhengzhou adjusted stakes in two other village banks: - In 2022, it raised its ownership in Xinzheng Zhengyin Village Bank from 25% to 51%. - In March 2023, it acquired shares from 78 shareholders of Zhongmu Zhengyin Village Bank, increasing its stake from 18.53% to 49.51%.

Bank of Zhengzhou stated that it will continue enhancing control over its village banks through stake acquisitions or capital injections to strengthen risk resilience and operational stability.

**Province-Wide Village Bank Reforms** Multiple banks in Henan are advancing reforms, including stake increases and mergers. - In February, Henan Rural Commercial Bank integrated 25 institutions, including Xingyang Lifeng Village Bank, converting them into branches. - By September, it absorbed four more village banks, totaling five mergers.

Zhongyuan Bank has also been active: - In January, it received approval to acquire Lushi Zhongyuan Village Bank, opening a new branch in April. - In October, it announced plans to buy three village banks for 783 million yuan, which will be restructured as branches.

Originally overseeing 13 village banks, Zhongyuan Bank cited regulatory risk-prevention policies as motivation for the mergers.

**Regulatory Focus on Risk Mitigation** Village banks and rural credit cooperatives remain vital to China’s financial system. Regulators emphasize structural reforms to address risks, with small and medium financial institution reforms topping the 2025 agenda of the National Financial Regulatory Administration.

Recent reforms include mergers, branch conversions, and market exits. Dong Ximiao, Chief Researcher at Zhaolian, noted that strategies vary by bank, predicting accelerated consolidation and a reduction in village bank numbers.