Tue, Apr 02, 2019 - Page 11 News List

US overtakes China as largest debtor of banks

DECLINE:It was the third consecutive quarter that Taiwanese banks’ exposure to China has moved lower on an ultimate risk basis due to the volatility of the yuan

Staff writer, with CNA

The US at the end of last year overtook China to become Taiwan’s largest debtor on an ultimate risk basis, the central bank said.

Data released on Friday last week showed that outstanding international claims by Taiwanese banks from the US totaled US$73.67 billion as of Dec. 31, topping US$66.57 billion in exposure to China on an ultimate risk basis, which calculates a nation’s consolidated debts after risk transfers.

The increase in banks’ exposure to the US reflected their fund allocation needs by putting more funds in the US market, while exposure to China fell to the lowest level since the end of June 2016, analysts said.

On a direct risk basis, Taiwanese banks’ exposure to the US totaled US$75.68 billion, compared with US$44.85 billion to China, the data showed.

It was the third consecutive quarter that Taiwanese banks’ exposure to China has moved lower on an ultimate risk basis due to the yuan’s volatility, which dragged down the value of the exposure converted into US dollars, the central bank said.

During the fourth quarter of last year, the continued fall in yuan deposits held by banks operating in Taiwan was also cited as a reason for the decline in exposure to China, the central bank said.

In addition, as trade friction between Washington and Beijing continues, many Taiwanese banks have adopted a more prudent attitude on lending to China, which saw their exposure fall, analysts said.

Hong Kong was third in terms of Taiwanese banks’ exposure on a direct risk basis with US$35.75 billion, followed by Luxembourg with US$35.50 billion and Japan with US$30.22 billion.

Australia took sixth place with US$19.99 billion in exposure, ahead of the Cayman Islands with US$17.32 billion, Britain with US$15.73 billion and Singapore with US$14.24 billion.

The central bank’s data showed that outstanding international claims by banks in Taiwan fell 0.30 percent quarterly to US$406.0 billion in the fourth quarter.

The decline largely resulted from a drop in loans extended to foreign banks and the private sector in foreign nations, the central bank said.

Bank exposure to Taiwan’s top 10 debtors at the end of last year stood at US$302.6 billion, accounting for 74.52 percent of the nation’s total international claims on a direct risk basis, the central bank said.

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