Lending from banks operating in Taiwan to China as of the end of December last year fell from the end of September, reflecting a decline in deposits placed by local banks in the Bank of China’s (中國銀行) Taipei branch, Taiwan's central bank said.
Still, China remained the largest debtor to Taiwanese banks, with outstanding claims on a direct-risk basis as of the end of December totaled US$49.14 billion, down 4.3 percent from the prior quarter, central bank statistics showed.
On an ultimate-risk basis, which calculates a nation’s consolidated debts after risk transfers, local banks’ exposure to China as of the end of December fell by 7.7 percent from the end of September to US$84.16 billion, the data showed.
The central bank said Taiwanese banks assigned more funds to buy Chinese yuan-denominated bonds issued in the local market, which have been dubbed “Formosa bonds,” and other financial instruments.
As a result, local banks’ deposits in the Bank of China’s Taipei branch were on the decline, dragging down the exposure to China at the end of last year, the central bank said.
Luxembourg ranked No. 2. Local banks’ exposure to Luxembourg totaled US$40.25 billion as of the end of December on a direct-risk basis, ahead of Hong Kong with US$33.59 billion, the US with US$30.3 billion, and the British West Indies with US$14.31 billion, statistics showed.
The Cayman Islands ranked No. 6 after local banks loaned US$11.72 billion on a direct-risk basis. The UK followed with US$11.71 billion, Singapore with US$7.24 billion, Australia with US$5.47 billion and Japan with US$4.22 billion, data showed.
The central bank said that exposure to the top 10 debtors of Taiwan’s banks reached US$207.9 billion, accounting for 76.59 percent of Taiwan’s total international claims, which are worth US$271.5 billion as of the end of December.
As of the end of December, Taiwan’s international claims on a direct-risk basis fell 3.58 percent from the end of September, as lending to the non-bank private sector declined during the three-month period, the central bank said.
The data showed that local exposure to the non-bank private sector totaled US$183.20 billion as of the end of December, making up 67.48 percent of the country’s total international claims, down 3.81 percent from the end of September.
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