China closes more than 670 banks in 2025, leaving 3,139, down 23% in four years
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China is pressing ahead with the consolidation of its regional banks. In 2025 alone, more than 670 financial and banking entities were closed, a record high, and nearly all of them were in rural areas. As a result, the number of banking entities fell to 3,139 at the end of 2025, a decline of 23% over four years. A report by Fitch, citing data from China's National Financial Regulatory Administration, or NFRA, said China's small banks, most of them rural and city-level lenders, remain the weakest part of the system, weighed down by asset-quality problems, weak capital and regulatory shortcomings. Rural and regional city banks together account for more than a quarter of the assets in China's banking system. Jason Bedford, a senior researcher at the East Asian Institute of the National University of Singapore, believes the consolidation simplifies regulation and limits the liquidity risks of small financial institutions, adding that he has never seen consolidation on this scale. In July, authorities in the city of Wuhan took control of Z-Bank, which held 124 billion yuan in assets at the end of 2024, before merging it with Hankou Bank. It was the first bank takeover since the seizure of Baoshang Bank in Inner Mongolia in 2019. Moody's expects the mergers and acquisitions to continue.