Sun, Aug 14, 2011 - Page 11 News List

Taiwan banks not over-exposed to tech sector: Fitch

By Lisa Wang  /  Staff Reporter

Fitch Ratings yesterday said the world’s biggest contract electronics manufacturer, Hon Hai Precision Industry Co Ltd (鴻海精密), borrowed a large chunk of its NT$307 billion (US$10.58 billion) in bank loans from overseas lenders rather than from Taiwanese lenders, as the ratings agency had mistakenly stated previously.

Only NT$60 billion, or one-fifth of total bank loans, was borrowed from local banks as of March 31, Fitch Ratings said in an e-mailed statement yesterday.

The ratings agency said it had “incorrectly included a big portion of Hon Hai’s bank loans from overseas [into those from local banks]. Therefore, Fitch Ratings has overestimated the risk faced by Taiwanese banks in exposure to Hon Hai and other highly globalized local technology firms.”

Reversing its previous cautious stance after deducting Hon Hai’s bank loans from foreign lenders, Fitch Ratings said Taiwanese banks have smaller-than-expected and appropriate exposure to the overall technology sector.

On Thursday, Fitch said that at the end of June, about 13 percent of loans provided by Taiwanese banks were to technology companies and loans to the nation’s top 10 tech companies amounted to 6.5 percent of system loans.

Taiwanese banks have moderate exposure to the overall technology sector, the ratings agency said at the time.

Yesterday, in a fine-tuned statement, Fitch Ratings said Taiwanese technology companies in general were financially healthy, as their balance sheets indicated.

Hon Hai, in particular, booked a strong cash position, citing figures almost equal to its bank loans.

As of the first quarter of this year, the company had NT$280.53 billion in cash, according to the latest financial statement Hon Hai filed to the Taiwan Stock Exchange.

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