Lending by Taiwanese banks to China dropped between the end of December last year and the end of March, and analysts say financial authorities’ efforts to tighten monitoring of banks’ exposure to China is the reason.
Statistics released by the central bank show that outstanding international claims by Taiwanese banks to China on a direct risk basis as of the end of the first quarter of the year 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 Taiwanese banks’ exposure to China-based companies or individuals.
However, China remained the largest debtor to Taiwan, the statistics showed.
Many market observers have voiced concerns that local banks’ large exposure to China has increased the risks faced by the nation’s banking system, prompting financial authorities to intensify efforts to supervise banking operations.
On an ultimate risk basis, which calculates a nation’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 central bank said.
Luxembourg was the second-largest debtor to Taiwanese banks on a direct risk basis as the banks’ exposure to that small nation stood at US$39.73 billion as of the end of March.
Hong Kong came in third with exposure totaling US$33.92 billion, ahead of the US with US$33.01 billion and the British West Indies with US$14.33 billion.
The UK was the sixth-largest debtor, 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 the nation’s total international claims.
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