Local banks’ exposure to mainland China falls further as of end-March
Lending extended by Taiwan’s banks to China as of the end of March fell further from the end of December with market analysts attributing the fall to Taiwanese financial authorities’ move to tighten monitoring of banks’ exposure to the mainland.
According to statistics released by the Central Bank of the Republic of China (Taiwan), outstanding international claims by Taiwanese banks to China on a direct risk basis as of the end of the first quarter fell 3.63 percent from a quarter earlier to US$47.35 billion.
The decline followed a previous 4.3 percent sequential drop recorded as of the end of December, marking the second consecutive decrease in exposure of local banks to China-based companies or individuals.
Still, China remained the largest debtor to Taiwan, the central bank statistics showed.
Many market observers have voiced concerns that large exposure to China from Taiwan’s banks has raised risks faced by the Taiwanese banking system, prompting local financial authorities to intensify their efforts to supervise the banks’ operations.
On an ultimate risk basis, which calculates a country’s consolidated debts after risk transfers, Taiwanese banks’ lending to China also fell to US$79.78 billion as of the end of March, from US$84.16 billion recorded at the end of December, the data indicated.
In terms of total outstanding international claims by Taiwanese banks, as of the end of March, the amount on a direct risk basis reached US$280.28 billion, up 3.24 percent from the end of December.
On an ultimate risk basis, the total outstanding exposure to overseas borrowers as of the end of March also rose 3.15 percent from the end of December to US$333.1 billion, the bank said.
Following China, Luxembourg ranked as the second largest debtor to Taiwan on a direct risk basis as Taiwanese banks’ exposure to the European country stood at US$39.73 billion as of the end of March.
Hong Kong came in third with Taiwanese banks’ exposure totaling US$33.92 billion, ahead of the United States with US$33.01 billion, and the British West Indies with US$14.33 billion.
The United Kingdom was the sixth largest debtor to Taiwan with Taiwanese banks’ exposure at US$ 13.93 billion, followed by the Cayman Islands with US$12.24 billion, Singapore with US$7.63 billion, Australia with US$5.82 billion, and Japan with US$5.51 billion.
The central bank said that exposure to the top 10 debtors totaled US$213.47 billion, accounting for 76.16 percent of Taiwan’s total international claims.