Due to the earlier rapid expansion of their business scope and assets as well as the impacts from the bankrupt enterprises, many of the city commercial banks (CCBs) are troubled by poor asset quality and declining business performance.

The government has allowed more city commercial banks to raise fund through initial public offering to help replenish the dwindling capital.

The research team at ANBOUND Consulting is of the view that in order to truly resolve its problems, on the one hand, CCBs should avoid rapid expansion and reduce both ineffective and invalid lending as well as using various means including securitization of non-performing loans to reduce its operational risk . On the other hand, the local government too should reduce its intervention on CCBs' affairs.