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Taiwan banks' exposure to China fall

Taiwan banks' exposure to China fall

Taipei, Sept. 19 (CNA) Lending extended by Taiwan's banks to China as of the end of June trended lower as the efforts made by the government to tighten its monitoring of local lenders' exposure to the mainland paid off, according to the central bank. Still, China remained the largest debtor to Taiwan's banking system and such massive exposure to the mainland has raised concerns over a possible increase in risks at a time when the Chinese economy, the second largest in the world, showed signs of slowing down and prompted the government to watch more closely the development, market analysts said. Cited statistics, the central bank said that outstanding international claims by Taiwanese banks to China on a direct risk basis as of the end of the second quarter fell US$2.4 billion from a quarter earlier to US$48.5 billion. On an ultimate risk basis, which calculates a country's consolidated debts after risk transfers, Taiwanese banks' lending extended to China also registered a drop, falling US$500 million from a quarter earlier to US$82.9 billion, marking the third consecutive quarterly drop. Taiwanese banks' exposure to China as of the end of June even fell US$5 billion and US$10 billion on a direct risk basis and on an ultimate risk basis, respectively, from a peak recorded at the end of September 2014, the central bank statistics showed. Compared with the end of December 2014, Taiwan banks' lending to China as of the end of June also fell US$600 million and US$1.3 billion on a direct risk basis and on an ultimate risk basis, respectively, the data indicated. The central bank said that the data shows efforts by the Financial Supervisory Commission and other related government agencies to tighten their control on Taiwanese banks' exposure to China have been effective. The bank said that the monitoring has helped the local banking sector rein in possible risks to China. According to the central bank, Taiwanese banks own 23 branches, 10 sub-branches and two subsidiaries in China, and the number of offices have been increasing amid warming economic exchanges across the Taiwan Strait. In terms of total outstanding international claims by Taiwanese banks, as of the end of June, the amount on a direct risk basis reached US$289.8 billion, up US$5.9 billion or 2.08 percent from the end of March, the central bank said. After China, Luxembourg ranked as the second largest debtor to Taiwan on a direct risk basis after Taiwanese banks extended US$39.92 billion in loans to the European country, ahead of Hon Hong with US$33.67 billion, the United States with US$33.13 billion, and the British West Indies with US$14.58 billion. The United Kingdom came in sixth with US$14.38 billion, followed by the Cayman Islands with US$12.19 billion, Singapore with US$9.62 billion, Japan with US$6.54 billion and Australia with US$6.23 billion. The central bank said the top 10 debtors with aggregate borrowing of US$218.7 billion accounted for 75.48 percent of Taiwan's total international claims as of the end of June. (By Tsai Yi-chu and Frances Huang)


Updated : 2021-09-28 02:39 GMT+08:00