In 2025, the loan scale of several private banks in China showed negative growth, with a decrease in loan growth rates for some private banks. With local state-owned capital entering and gaining controlling stakes in many private banks, analysts believe this marks a new era of “public-private partnership,” as the Chinese Communist Party (CCP) begins to “harvest leeks” from private banks.
According to a recent report by “Jiemian News,” analysis based on the annual reports of various private banks in China revealed that out of the 18 private banks that disclosed their 2025 annual reports, 7 experienced a contraction in loan scale, while 7 others saw a slowdown in loan growth, with the remaining 4 showing a slight increase in growth.
Among the private banks experiencing negative loan growth, Yilink Bank, Blue Sea Bank, and Huatong Bank saw declines of -50.3%, -39.78%, and -24.08%, respectively. Sanxiang Bank and WeBank experienced decreases of -4.37% and -3.39%, respectively, while Yumin Bank and Zhenxing Bank both saw marginal declines of 0.26% and 0.04%.
A recent statement from a private bank official mentioned, “Loans are not being disbursed, and we are constantly exploring directions for transformation.”
The advantage of high interest rate differentials that supported the profitability of private banks is gradually diminishing. In the second half of last year, the average net interest margin of private banks decreased to 3.83%, although it remains relatively high within the industry, it has reached its historical low. Following the implementation of the “assisted loan new regulations,” private banks that heavily relied on third-party platforms and operated on a “high-cost customer acquisition, high-interest rate pricing” model were forced to undergo transformation.
The “Assisted Loan New Regulations” refer to the notice issued by the China Banking and Insurance Regulatory Commission on strengthening the management of commercial banks’ internet assisted loan business to improve the quality and efficiency of financial services. It came into effect on October 1, 2025. The new regulations require commercial banks to control the comprehensive financing cost for borrowers within an annualized rate of 24% (previously up to 36%) and establish a whitelist system.
In the financial sector, “assisted loan” refers to third-party technology platforms or intermediary organizations that assist banks in completing lending operations leveraging their technological capabilities and customer acquisition advantages. Internet platforms such as Ant Group, JD.com, Tencent, and Douyin all engage in assisted loan services.
Senior researcher Su Xiaorui from Suxi Intelligence commented to “Jiemian News” that the policy framework represented by the new assisted loan regulations emphasizes managing assisted loan collaborations, enforcing interest rate boundaries, and strengthening the responsibility of banks. As a result, private banks have generally tightened cooperation, reducing or even ceasing some traditional high-interest assisted loan services.
Regarding the “Assisted Loan New Regulations,” Professor Xie Tian from the University of South Carolina’s Moore School of Business stated to Dajiyuan that private banks are facing a difficult survival situation in China. The CCP not only fails to provide assistance but also tightens control, essentially adding insult to injury with these measures.
Professor Xie believes that the CCP is currently “harvesting leeks,” from the public and private sectors on a large scale. As China’s overall economy declines and financial pressures increase, the speed at which the CCP seizes funds from private capital is accelerating.
“21st Century Economic Review” previously reported that the accelerating decentralization of business operations by state-owned and joint-stock banks has been a significant factor leading to the contraction of loan operations in private banks. Leveraging inherent advantages in funding costs, brand credibility, and channel networks, state-owned and joint-stock banks are accelerating the provision of inclusive financial services to micro-enterprises and small and medium-sized enterprises, further squeezing the survival space of private banks.
A senior researcher from a private bank stated to “Jiemian News” that the reasons for the slowdown in loan growth or negative growth in different private banks may vary, but influenced by macro background, the new assisted loan regulations, and asset shortage, the reduction in the loan scale of private banks is normal.
Su Xiaorui mentioned to “Jiemian News” that from a macro perspective, the limited willingness of main market entities, represented by micro-enterprises, to expand production, increases the difficulty for banks to lend. From a market perspective, including fluctuations in asset quality of banking institutions, including private banks, bad debt rates have increased, leading some institutions to proactively compress lending scale based on post-loan circumstances.
He believes that the overall decline in loan scale of private banks in 2025 is the result of combined factors such as deteriorating market conditions, policy tightening, and others.
Chinese issues expert Wang He analyzed for Dajiyuan that private banks in China face a very abnormal situation. The total assets of the 19 private banks nationwide are approximately 2.15 trillion, accounting for only 0.5% of the entire banking industry. The main state-owned entities in China’s banking industry are strictly controlled by CCP policies, leaving very little space for private banks to operate, leading to minimal development prospects.
He believes that the banking industry in China is facing significant challenges and needs to transform. In the past, survival relied mainly on deposit and loan operations and net interest margins, but now comprehensive financial services must be provided. Private banks lack an advantage in this area, so for them to survive, they must carve out a niche in a specific market segment with the support of major shareholders. However, the outlook for this seems rather pessimistic.
The entry of local state-owned capital into and gaining controlling stakes in private banks has become an important path for their transformation. According to a report by “21st Century Economic Review” on April 23 this year, it has been confirmed by multiple sources that Jilin State-owned Capital intends to take over Yilink Bank, which is currently going through the legal process. This is not an isolated case, as since 2024, there have been new changes in the equity structure of private banks with the entry of state-owned capital and state-owned control.
Anhui Xin’an Bank, held 51% by three Anhui state-owned enterprises, including Hefei Xingtai Financial Holdings, achieved absolute state-owned control. Following Nanjing Financial Holding Co., in April this year, two local enterprises in Nanchang invested in and acquired shares in Jiangxi Yumin Bank, raising state ownership to 59.5%, achieving absolute state-owned control.
Professor Xie Tian and veteran media professional Mike Li both believe that the CCP is targeting private banks! It is a new era of the “public-private partnership” model.
Professor Xie mentioned to Dajiyuan that the contraction of loans from private banks is forcing the industry to transform, and the trend of privatization of private banks will not change. It somewhat resembles the mixed economic model of public-private partnership organized by the CCP in the 1950s, except that the CCP is now taking control of private banks while they are struggling, in contrast to its past practice of forcefully seizing control.
Mike Li, in comments to Dajiyuan, stated that the CCP is targeting private banks much like how they are pressuring private real estate enterprises! This transformation resembles a new form of mixed business operations in the financial sector, focusing on the re-centralization of state-owned capital.
In crucial industries in China, private capital is exiting while local state-owned capital is entering, seen in banks, city commercial banks, securities firms, and real estate. Specific cases include Evergrande Group exiting the financial sector, Tomorrow Group being taken over, Anbang’s restructuring, and Zhongbang withdrawing from Yumin Bank, all representing the continued expansion of local state-owned and central state-owned enterprises.
Wang He believes that there are probably only two ways out for China’s private banks. The first is to rely on major shareholders to provide resources or to explore and deeply delve into specific areas to root themselves and find a way out with the support of major shareholders in a specific market segment. However, this prospect also seems rather pessimistic.
He also mentioned that foreign banks do not have much space in China either. With only around forty foreign banks, their assets account for only 0.7%. Foreign banks primarily engage in cross-border business, facilitating foreign firms to enter China and assisting Chinese companies to go global, making it unlikely for state-owned banks to replace this business segment. Thus, the profit of foreign banks is relatively good compared to private banks.