US Exposure Soars, China Closes In: Taiwan Banks' Overseas Risks Grow

Taipei [Taiwan]: Data compiled by the central bank showed Taiwanese banks' exposure to the U.S. hit USD194.87 billion as of the end of June, up USD14.80 billion or 8.22 percent from a quarter earlier. Speaking with reporters, Hsieh Jen-chun, deputy head of the central bank's Department of Financial Inspection, said on Friday that banks raised their deposits and interbank loans in the US market and placed more investments in stock and bond mutual funds. Meanwhile, China rose one notch to become the second largest debtor nation of Taiwanese banks at the end of June as exposure rose USD 2.38 billion or 5.16 percent from a quarter earlier to USD 48.50 billion at the end of the second quarter, the data showed. Hsieh said the increase in exposure to China came as banks took advantage of a stronger Chinese yuan to invest in the Chinese bond market, while they also extended more interbank loans.

Widening Gap in Exposure

However, the gap between the exposure to the US and China by Taiwanese banks continued to widen, hitting the largest-ever level of USD146.4 billion at the end of June, according to the central bank. At the end of June, international claims by Taiwanese banks on a direct risk basis -- comprising loans, investments, deposits and other holdings -- rose by 5.57 percent from a quarter earlier to USD 648.2 billion largely due to an increase in lending to nonbank firms, according to the data. After the US and China, Luxembourg ranked third at the end of June, down one notch from a quarter earlier with exposure by Taiwanese banks hitting US$48.06 billion, up 4.20 percent from a quarter earlier, followed by Australia (USD 40.22 billion) and Japan (USD 37.26 billion), the central bank said out the top 10 debtor areas were Hong Kong, with exposure of USD 32.29 billion, the United Kingdom (USD 22.11 billion), Singapore (USD 19.02 billion), France (USD 18.86 billion), Vietnam (USD 16.84 billion) and South Korea (USD 16.29 billion). Exposure to the top 10 debtors totaled USD478.0 billion, accounting for 73.75 percent of the total international claims held by Taiwan's banks at the end of June, the central bank said.

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