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Bank of Sichuan Grabs Approval for Establishment, On Track to Become China’s Biggest Municipal Lender

China’s banking regulator has just given its approval to the launch of a new municipal lender in the central Chinese province of Sichuan via the merger of two pre-existing local institutions.

The China Banking and Insurance Regulatory Commission (CBIRC) gave its approval to preparations for the establishment of Bank of Sichuan (四川银行) on 9 September, according to an announcement made by the Sichuan province government on 11 September.

Bank of Sichuan will have registered capital of 30 billion yuan (USD$4.39 billion), making it the largest municipal commercial bank in China upon its full establishment.

This capital scope would put it amongst China’s top 10 A-share banks, and is well ahead of the registered capital of Bank of Beijing (21.1 billion yuan) and Bank of Shanghai (14.2 billion yuan).

The new bank will be created via the merger of two pre-existing municipal banks in Sichuan province – Liang­shanzhou Com­mer­cial Bank (凉山州商业银行) and Panzhi­hua Mu­nic­i­pal Com­mer­cial Bank (攀枝花市商业银行). Liangshanzhou had previously unveiled the merger plans at the end of July.

Liang­shanzhou Com­mer­cial and Panzhi­hua Mu­nic­i­pal are amongst eight banks in China that have failed to pro­vide an­nual re­ports for the past two years, with the oth­ers in­clud­ing Baoshang Bank (包商银行), Or­dos Bank (鄂尔多斯银行), Heng­shui Bank (衡水银行), Bank of Tiel­ing (铁岭银行), Xin­jiang Huihe Bank (新疆汇合银行) and Ningbo Dong­hai Bank (宁波东海银行). 

The move comes amidst a wave of mergers and restructurings of regional lenders in China, as part of efforts to firm up the sector due to a spate of failures and bank runs since May 2019.

Since May there have been at least eight such mergers, including the merger of three rural commercial banks into Xuzhou Rural Commercial Bank (徐州农商行) in Jiangsu province, and the creation of Dingzhou Rural Commercial Bank (定州农商行) in Hebei Province.

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