In 2016, Yu Hao switched jobs to a private bank in the central region.

At that moment, he believed that private banks, with their flexible mechanisms and innovative culture, would usher in sustainable and rapid development dividends. Ten years later, he discovered that several private banks had transformed into state-owned assets.

In late April 2026, as the first private bank in Northeast China, the matter of introducing state-owned shareholders to Yilian Bank was basically settled. Local state-owned asset - Jilin Provincial Financial Holding Group Co., Ltd. will take over the bank as the major shareholder.

At the same time, local state-owned enterprises in Jiangxi Province, Nanchang Honggutan Urban Investment Group and Nanchang Water Industry Group, respectively won 400 million shares and 190 million shares of Yumin Bank through market auctions. Yumin Bank is the first private bank in Jiangxi. Once the equity delivery is completed, the state-owned capital holding ratio of this bank will reach 59.5%.

The reporter called relevant personnel from Yilian Bank and Yumin Bank to inquire about the progress of the equity change. The other party stated that 'the bank announcement shall prevail'.

As a pilot project for deepening financial reform, relevant departments launched a pilot program for private banks in March 2014, and since then, 19 private banks have emerged one after another. After 12 years of development, these private banks have formed diversified business models based on their shareholder backgrounds and regional economic characteristics. By the end of 2025, the asset size of 19 private banks has exceeded 2.2 trillion yuan. At the same time, the development momentum of private banks has shown significant differentiation. Among them, the asset size of Wangshang Bank and Weizhong Bank respectively exceeded 760 billion yuan and 500 billion yuan, while Su Shang Bank, Zhongbang Bank, and Xinwang Bank exceeded 100 billion yuan. More than 10 other private banks still failed to break through the 100 billion yuan mark, and some banks have encountered difficulties in the operation of private enterprise shareholders.

During the period of 2024-2025, Anhui Province's private banks Xin'an Bank and Jiangsu Province's Xishang Bank have introduced local state-owned capital, along with Yilian Bank and Yumin Bank, which means that the four private banks will gradually transform into "state-owned backgrounds". According to Wang Pengbo, an analyst at Broadcom Consulting, the introduction of state-owned enterprise capital can not only optimize the corporate governance structure of private banks, alleviate the impact on operational stability caused by continued shareholder turbulence, but also significantly enhance the credit endorsement of private banks, help reduce financing costs and improve liquidity conditions, and provide resource support for resolving stock asset risks.

At the same time, industry practitioners are also pondering: why do some private banks have to shed their "private" background? What setbacks have occurred in the business development strategy of private banks? What is the future path for private banks?

State owned assets enter the market

Three years later than Yu Hao, Wang Jun joined a private bank in early 2019 as the head of the product innovation department.

This year, the reformed China Banking and Insurance Regulatory Commission continued to deepen financial system reform and support the development of private banks. During this period, Wuhan Zhongbang Bank, Fujian Huatong Bank, Weihai Blue Ocean Bank, Jiangsu Suning Bank, and Wuxi Xishang Bank were successively approved for establishment, and the number of private banks reached 19.

In 2012, the former China Banking Regulatory Commission issued the "Implementation Opinions on Encouraging and Guiding Private Capital to Enter the Banking Industry", marking the beginning of the emergence of private banks. From 2014 to 2015, the first five pilot private banks - Shenzhen Qianhai Weizhong Bank, Shanghai Huarui Bank, Wenzhou Minshang Bank, Tianjin Jincheng Bank, and Zhejiang Wangshang Bank - were successively established. In 2016-2017, relevant departments further promoted financial reform and encouraged private capital to enter the banking industry. The original China Banking Regulatory Commission has approved the construction applications of several private banks, including Sichuan Xinwang Bank, Hunan Sanxiang Bank, Anhui Xin'an Bank, Liaoning Zhenxing Bank, and Beijing Zhongguancun Bank.

Since its inception, private banks have been highly anticipated - relying on flexible mechanisms and innovative culture, on the one hand, they can solve the financing difficulties of small and medium-sized enterprises, fill the gap of traditional banks in the field of inclusive finance, and on the other hand, play the "catfish effect" to promote diversification and healthy competition in the financial market.

At that time, Wang Jun firmly believed that the development prospects of the domestic inclusive finance industry were broad, and private banks were expected to seize the growth dividends. He resolutely decided to switch from a city commercial bank to this private bank.

Our private enterprise shareholders also feel the same way, "Wang Jun recalled. In mid-2019, when he went to two private enterprise shareholders to negotiate business cooperation, the other party stated that the enterprise would consider investing in private banks as a key step in its business diversification development strategy; Through finance and industry, private enterprises will create more achievements in diversified business development; Therefore, enterprises will fully support the development of private banks in terms of capital, business empowerment, and customer resource introduction.

This also made Wang Jun feel very excited, thinking that switching to a private bank was a wise decision.

In 2020, Wang Jun's private bank planned to focus on expanding supply chain finance, hoping that private enterprise shareholders could introduce more customer resources. Unexpectedly, the other party stated, "Currently, the industrial prosperity is declining, and there are not many customer resources that can be introduced. The bank needs to enhance its ability to independently acquire customers

In 2021, after 5 years of development, this private bank hopes that private enterprise shareholders can increase capital as soon as possible to improve the bank's capital adequacy ratio. The response from private enterprise shareholders is' I am already short of money, the bank should find a way on its own '.

Wang Jun said that private enterprise shareholders are not stingy, but rather have faced severe business pressure since 2020, forcing them to shrink their diversification front. What impressed him deeply was that in early 2022, when he went to a private enterprise shareholder to seek deposit support, the other party directly took out the company's balance sheet and cash flow statement, informing him that the actual debt ratio of the company had exceeded 90%, and the operating cash flow had been negative for two consecutive years, unable to provide the bank with the required deposit funds support.

One year later, Wang Jun heard that this private enterprise had approached the local government and financial regulatory departments, admitting that it was in dire straits and unable to continue supporting the development of private banks. He hoped to transfer the equity of the private bank he held to a capable local enterprise.

According to Wang Jun's recollection, three years ago, the shareholders of this private enterprise hoped that the private bank could achieve an IPO (initial public offering) in 7-8 years, which would yield a return of over 20 times on this investment.

In recent years, Yu Hao has also been closely monitoring the phenomenon of state-owned enterprises investing in private banks. He found that in recent years, macroeconomic fluctuations and industry adjustments have caused private enterprises to encounter business turmoil, forcing them to shrink their diversified development strategies, which is an important trigger for local state-owned enterprises to gradually enter the market.

In 2025, Wuxi Guolian Development (Group) Co., Ltd. acquired 500 million shares of Xishang Bank held by Hongdou Group, becoming the largest shareholder of the latter. The cause was a liquidity crisis for Red Bean Group - due to overdue repayments, Red Bean Group's equity in Xishang Bank (worth 55 million yuan) was frozen.

In August 2024, Nanchang State owned Enterprise - Nanchang Financial Holdings Co., Ltd. acquired 600 million shares of Jiangxi Private Bank Yumin Bank held by Zhengbang Group, becoming the largest shareholder of the latter. This is because Zhengbang Technology, a subsidiary of Zhengbang Group, encountered a "cold winter" in the pig farming industry from 2021 to 2022, with a cumulative loss of about 32.2 billion yuan.

Wang Jun revealed that the work of introducing local state-owned enterprise shareholders into his private bank is nearing completion. At first, the shareholders of this private enterprise planned to transfer the equity of the private bank to other local private enterprises. After discovering that the latter's offer was about 15% lower than that of the local state-owned enterprise, they quickly extended an olive branch to the state-owned enterprise. In addition, considering the operational stability of private banks, local government departments also support the entry of local state-owned enterprises.

In fact, our internal employees also welcome local state-owned enterprises to enter, "said Wang Jun. The entry of local state-owned enterprises means that banks have the endorsement of state-owned assets, which guarantees the replenishment of capital, the reduction of financing costs, and the stability of business operations; More importantly, employees do not have to worry about reduced benefits such as delayed salary payments.

Wang Jun found that currently, the majority of state-owned enterprise shareholders are small and medium-sized private banks with asset sizes below 100 billion yuan.

This may indicate a deeper issue, "he analyzed. These private banks mainly rely on the resources of private enterprise shareholders to empower business development, lacking sustainable self generation and self-reliance capabilities. Once private enterprise shareholders are "unable to protect themselves", the banks will immediately face pressure such as insufficient credit allocation, slow development of industrial finance, and sharp decline in performance.

Development Momentum Differentiation

As the business director of a private bank in southern China, Xu Lin sighed that the development momentum of 19 private banks is highly differentiated. You may not expect that by the end of 2025, the total asset size of WeBank and Wangshang Bank will be 1.26 trillion yuan, accounting for about 57% of the entire private banking industry; the total revenue will be about 56.84 billion yuan, accounting for about 60%; and the total net profit will be about 14.3 billion yuan, accounting for about 80%. In comparison, the other 17 private banks are either still striving to break through the 100 billion yuan asset size or trying their best to avoid falling into the operational loss quagmire, "said Xu Lin.

According to incomplete statistics by reporters from the Economic Observer, the asset size of several private banks, including Zhongguancun Bank, Wenzhou Minshang Bank, Meizhou Merchants Bank, Huatong Bank, and Huarui Bank, is between 40 billion and 70 billion yuan, which is still some distance away from the 100 billion yuan threshold; In terms of employment performance, the annual net profit of several private banks such as Sanxiang Bank, Yumin Bank, Xin'an Bank, and Huatong Bank in 2025 will be less than 30 million yuan.

In Xu Lin's view, a key factor in the significant differentiation of private banks is the huge difference in resource endowments among shareholders. The original intention of the establishment of private banks is' one bank, one characteristic ', that is, to create local characteristic economies around the resource endowment of major shareholders, reflecting the nature of private banking. Therefore, the resource support of shareholders often determines the upper limit of the development of private banks, "he analyzed.

Private banks present a remarkable pattern of "co-existence of two powers": WeBank is positioned as "technology, inclusiveness and connectivity", mainly relying on Tencent's Internet resources to provide personal consumption finance and small and micro credit services; Online commercial banks rely on Alibaba's e-commerce ecosystem and focus on serving small and micro operators. With the support of massive traffic and business empowerment from the parent company, the two top institutions have not only made new breakthroughs in business development and operational performance, but have also begun to layout transaction banking, wealth management, and overseas business, seeking new growth points.

Compared to others, the main shareholders of most private banks focus on the B2B industry, which provides relatively limited customer resources. In addition, macroeconomic fluctuations and industry adjustments further weaken their support for private banks, resulting in slower development of business scale and other operational indicators of related private banks.

Yu Hao holds a different view on this - it is biased to blame the slow development of most private banks on shareholders' "lack of awesome". In recent years, large banks have been promoting the sinking of inclusive finance business, which not only increasingly squeezes the survival and development space of private banks, but also amplifies the competitive disadvantages of high debt costs, weak brand influence, lack of offline branches, and difficult customer reach of private banks.

Faced with these competitive environments, private banks have also sought to break through.

During the period from 2018 to 2021, Xu Lin obtained Internet deposit and loan customers and businesses through cooperation with several Internet institutions, resulting in an average annual growth of about 25% of the bank's asset size. However, since 2022, the regulatory policy on Internet deposit and loan business has been significantly tightened, especially after the issuance of regulatory policies such as the Notice on Regulating Commercial Banks' Personal Deposit Business through the Internet and the Notice on Further Regulating Commercial Banks' Internet Loan Business, Xu Lin's bank has had to significantly reduce the scale of Internet deposit and joint loan business, resulting in a slowdown in the growth of bank asset size.

Starting from 2024, the private bank he works for will return to the "embrace" of shareholder empowerment - focusing on the cross-border e-commerce expansion strategy of shareholders and increasing credit investment in small and micro enterprises in cross-border e-commerce. As of now, through the "diversion" of shareholders, this private bank has more than 2000 cross-border e-commerce small and micro loan customers, becoming a new engine supporting the expansion of inclusive finance business scale.

Xu Lin did not feel fortunate about it. He admitted that the development trend of private banks in the future will continue to diverge. For example, NetEase Bank and WeBank, relying on the strong resource endowment of shareholders, are expanding their trading banks and business overseas respectively, further expanding their business scale and achieving revenue diversification. However, other private banks still need to "find their own way" and strive to achieve breakeven and differentiated development. Once they encounter performance losses, some private enterprise shareholders will also play a "retreat drum" in the absence of investment returns and "business diversification strategy contraction" for many years.

Tian Lihui, a finance professor at Nankai University, believes that this "differentiation" is also a watershed for private banks to move from homogeneous dividends to differentiated competition. In the future, private banks will continue to exhibit the Matthew effect of 'the strong remain strong, the weak clear out', further increasing industry concentration.

'State owned Assets' Triggering New Changes

Regarding the imminent entry of state-owned assets, Wang Jun is both pleased and concerned - pleased that the entry of state-owned assets will provide stability guarantees for private banks, but concerned that after the change of major shareholders, it will bring a series of changes to the management team, and the bank may encounter the pain of adjustment in business strategies.

The Economic Observer reporter noticed that several private banks in which state-owned enterprises have invested have undergone management changes.

In 2025, after Wuxi Guolian Development (Group) Co., Ltd. became the major shareholder of Xishang Bank, it dispatched former Guolian Finance General Manager Li Jun as the Chairman and Party Secretary of Xishang Bank, and former Xishang Bank Chairman Xi Guoguang was transferred to the position of President.

In 2024, after Nanchang Financial Holding Co., Ltd. became the major shareholder of Yumin Bank, it invited Song Yuan, former Vice President and Chief Risk Officer of Sanxiang Bank, to serve as the President of Yumin Bank.

Wang Jun began to study the new business strategies of other private banks after the entry of state-owned enterprises. He found that these private banks are now simultaneously increasing their corporate business.

In 2025, Xishang Bank will absorb a total of 36.14 billion yuan in deposits, a year-on-year increase of 19.4%. Among them, unit deposits will reach 21.23 billion yuan, a year-on-year increase of 33.9%, while retail deposits will only increase by 3.4% year-on-year. Behind this is that Xishang Bank is focusing on the local industrial chain, building a digital supply chain finance platform, reducing consumer loans in the loan structure, increasing the proportion of corporate industry loans, and launching supply chain finance products such as order financing and warehouse receipt pledge.

The same goes for Xin'an Bank. In November last year, the State Administration of Financial Supervision and Administration approved three local state-owned enterprises in Anhui Province - Hefei Xingtai Financial Holdings (Group) Co., Ltd., Anhui Construction Engineering Group Holdings Co., Ltd., and Hefei High tech Construction Investment Group Co., Ltd. - to jointly acquire 51% of the equity of Xin'an Bank.

According to the 2025 financial report, the balance of corporate loans and corporate deposits of Xin'an Bank increased by over 80% and 60% respectively year-on-year. In comparison, the balance of personal consumption loans decreased year-on-year, and the proportion of the total loan amount dropped to less than 50%.

Wang Jun believes that local state-owned enterprises have numerous corporate clients and local government platform resources in the local area, making the development of corporate business a natural progression.

Perhaps this invisibly solves the long-standing shortcomings of slow industrial financial development and weak corporate service capabilities faced by private banks, and helps promote the coordinated development of retail and corporate businesses, reduce the risk of single business concentration, and build stronger business risk hedging capabilities, "said Wang Jun. However, whether private banks that have been focusing on retail inclusive business can quickly adapt to new business development strategies still needs to be adjusted.

Zhao Gang deeply felt the changes after the entry of state-owned assets. At the end of 2024, he joined a private bank in the central region as the Director of Product Innovation. To his surprise, one year later, this private bank introduced local state-owned enterprises as controlling shareholders.

After these local state-owned enterprises invested, they quickly adjusted the loan structure of banks, gradually reducing the scale of personal business loans based on housing loans, while increasing the scale of local supply chain finance loans, including providing credit services such as "order financing" and "accounts receivable pledge loans" to local home appliance and automotive industry chain suppliers.

Zhao Gang said that the core goal of these measures is to reduce the concentration of single loan business. Because state-owned enterprise shareholders have discovered that the personal loan business of this private bank will account for over 70% in 2024, there is a significant risk of business concentration.

Since the beginning of this year, he has frequently traveled to industrial parks where local automobile and home appliance companies gather, researching the latest changes in corporate financing needs and accelerating the research and development of supply chain finance products.

However, after state-owned enterprises invested, there were a series of changes in the business style of private banks, which made him a bit uncomfortable.

Before state-owned enterprises invest, facing new market opportunities, bank management requires product innovation teams to launch new products within one or two weeks and quickly seize the market. After state-owned enterprises invested, the bank management repeatedly emphasized business process compliance and risk control - if there is a lack of supporting risk control systems or compliance processes, it is better to shelve new products than to "take risks". At the same time, the number of personnel dedicated to risk control models, risk control strategies, risk control monitoring, data and risk system management in this private bank has increased to over 60, an increase of 1/5 compared to the past.

In Zhao Gang's view, the original innovative culture and flexible mechanism of private banks are colliding with the compliance and risk control management philosophy emphasized by local state-owned enterprise shareholders. Whether the two can reach an effective balance as soon as possible will affect the future development prospects of private banks after "nationalization".

Future Path Forward

As the head of the planning and finance department of a private bank in East China, Han Lili was originally proficient in various financial management tasks and could easily handle related financial management work on her own.

Starting from the second half of 2025, this private bank has put forward a new requirement for its employees, which is that every employee must learn to use artificial intelligence (AI) technology and apply AI technology to internal office, talent recruitment, marketing planning, financial management and other work scenarios. To this end, the bank has also set up new assessment standards: the AI usage skills mastered by each employee will be assessed at the end of the year as a basis for job promotion and whether the year-end bonus can be fully paid.

Starting from 2026, she also added another job - using AI technology to participate in personnel recruitment. That is, she designs interview questions through AI technology, completes the first two rounds of interviews with AI technology, and then recommends candidates to bank leaders based on the scores provided by AI technology, completing the final round of "manual interviews".

At first, she felt that using AI technology was a bit redundant, but soon realized the strategic intention of this private bank - in the environment where large banks continue to promote market sinking and the competition in the inclusive finance market is increasingly fierce, private banks must firmly embrace AI and other technological capabilities to "enhance themselves" in order to win a place.

By the end of 2025, the asset size of Han Lili's private bank will be slightly over 60 billion yuan, and the per capita production capacity of employees will be around 100 million yuan. The bank management is not satisfied with this and proposed at this year's business strategy meeting that "we need to deepen the application of AI technology and strive to double the per capita production capacity of employees in the next 3-5 years in order to establish a foothold in the fierce market competition. ?

It is not easy to do this job well.

This year, Han Lili's private bank plans to launch a new generation core system and accelerate the iteration of risk control strategies and significantly enhance its inclusive financial service capabilities by introducing cutting-edge technologies such as AI. Therefore, the bank management once wanted to persuade private enterprise shareholders to increase capital for AI technology research and development applications.

However, considering that some private enterprise shareholders are cash strapped, they can only persuade them to provide AI research and development support to help banks further improve the operational efficiency of AI in internal office, business data analysis, and inclusive finance ecosystem construction. Our most urgent need for technological empowerment at present is to enhance our business data analysis and market insight capabilities through AI technology, and accelerate the pace of business innovation. ?Han Lili revealed. Fortunately, private enterprise shareholders have agreed to provide desensitization business data and AI deep learning technology support to assist banks in accelerating the development of supply chain finance products such as "guarantee+bill" and "guarantee+guarantee".

Zhao Gang found that major shareholders of local state-owned enterprises also attach great importance to the importance of technological capabilities for the future development of private banks. At the beginning of the year, they agreed to allocate some funds from the product marketing budget to the bank's technology department for the construction of a new AI operation system.

Looking back at his 10-year career in private banking, Yu Hao frankly stated that technological capability is a key factor in whether private banks can avoid being eliminated or marginalized in the fierce market competition.

In the past few years, the retention rate and refinancing rate of small and micro credit customers at his private bank have both exceeded 70%. This is largely due to the bank's technology empowerment, which enables these small and micro enterprises to quickly obtain loans for raw material procurement, production, and timely delivery of orders, solving their urgent needs. The stickiness of these customers has also enabled this private bank to continue to focus on local industrial characteristics and shareholder resource empowerment, withstand the impact of large banks' sinking and customer expansion in the local supply chain finance field, and achieve an average annual asset growth of over 10%.

Tian Lihui believes that in order for private banks to hone their new business competitiveness in the future, they must grasp three directions: first, strategic focus, shifting from traffic dependence to scenario deep cultivation, and building irreplaceable professional capabilities in specific industrial chains or scientific and technological innovation tracks; The second is the leap in capability, driven by AI to reduce costs and increase efficiency, deeply embedding technology into the entire process of small and micro finance and risk control, and continuously improving financial service capabilities; The third is structural optimization, reducing high cost deposits, moderately diversifying assets, and building a stable balance sheet with low volatility.

(At the request of the interviewer, Wang Jun and Zhao Gang are given pseudonyms)