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Taiwan banks' exposure to China fall for 4th consecutive quarter

Taiwan banks' exposure to China fall for 4th consecutive quarter

Lending extended by Taiwanese banks to China as of the end of September has fallen further, marking the fourth consecutive quarter of decline at a time when China's economy is slowing down, according to Taiwan's central bank.

The central bank said that since the Financial Supervisory Commission (FSC), the top financial regulator in Taiwan, has asked Taiwanese banks to tighten their risk control, banks' exposure to China moved lower accordingly.

Still, China remained the largest debtor to Taiwan's banking system, the central bank said.

As of the end of September, outstanding international claims by Taiwanese banks to China on a direct risk basis stood at about US$41 billion, down US$7.5 billion or 15.42 percent from the end of June. The latest figure was the lowest level since the fourth quarter of 2013.

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 to US$70.12 billion, compared with US$82.87 billion recorded at the end of June.

The central bank said that with the People's Bank of China (PBOC) cutting interest rates and leading the Chinese yuan to depreciate, the yuan deposits held by Taiwanese banks have been on the decline, which also lowered the exposure to the mainland.

In terms of total outstanding international claims by Taiwanese banks, as of the end of September, the amount on a direct risk basis reached US$270.6 billion, down US$19.1 billion or 6.60 percent from a quarter earlier.

On an ultimate risk basis, Taiwanese banks' total exposure as of the end of September fell US$18.4 billion or 5.49 percent from a quarter earlier to US$316.9 billion, the central bank said.

It added that the decline in Taiwan's total outstanding international claims resulted from volatility in the global markets during the July-August period, when the PBOC repeatedly cut the yuan's reference rate against the U.S. dollar sharply to send the yuan into a tailspin.

After China, Luxembourg ranked as the second largest debtor to Taiwan on a direct risk basis. Taiwanese banks had extended US$33.90 billion in loans to the European country, down from US$39.92 billion recorded at the end of June.

The United States replaced Hong Kong as the third largest debtor to Taiwan on a direct risk basis, with Taiwan's banks extending US$33.56 billion in loans, surpassing the US$31.84 billion in exposure to Hong Kong, which dropped one notch to fourth place.

The British West Indies came in fifth with US$13.74 billion, ahead of the United Kingdom with US$12.92 billion, Cayman Islands with US$12.30 billion, Singapore with US$8.76 billion, Japan with US$7.39 billion and Australia with US$6.10 billion.

The top 10 debtors with aggregate borrowing of US$201.5 billion accounted for 74.45 percent of Taiwan's total international claims on a direct risk basis as of the end of September.


Updated : 2021-09-29 03:27 GMT+08:00