China is not done restructuring banks. Using both our quantitative ranking and deterioration in financial disclosure as a separate warning signal, we still identify a tail of institutions showing serious balance-sheet stress. The Zhongbang takeover also suggests that the authorities are becoming more willing to use harder resolution tools, including formal takeover and potential creditor loss-sharing.

The good news is that these banks are very small. The bottom 30 institutions in our asset-side ranking account for just 4.2% of total assets in the sample. A separate group of banks with materially impaired financial disclosure, which we treat as high risk outside the quantitative ranking, accounts for a further 0.5%. By contrast, the 30 strongest-ranked banks account for 66.3% of sample assets.

Liability-side risk is no longer concentrated in the weakest banks. Many of the weakest regional banks have conservative funding structures because weak credit demand and restricted interbank access have forced them to retrench. The more vulnerable liability profiles are concentrated elsewhere, among banks that still combine high interbank dependence, elevated LDRs and thin margins. System-wide liquidity risk remains low, but these bank-specific vulnerabilities remain material.