The risks of Taiwanese financial firms’ NT$1.12 trillion (US$35.12 billion) exposure to China are controllable, despite growing debt woes in the world’s second-largest economy, the Financial Supervisory Commission (FSC) said on Tuesday.
Concerns about debt contagion in China have risen after Zhongzhi Enterprise Group Co (中植企業), which managed about 1 trillion yuan (US$138 billion) of assets, this week missed payments on multiple high-yield investment products.
In addition, property giant Country Garden Holdings Co (碧桂園), which had racked up about 1.4 trillion yuan in liabilities as of the end of last year, and faces 7.8 billion yuan in payments on notes and bonds next month, on Monday suspended 11 of its onshore bonds.
Photo: AFP
Taiwan’s banking, insurance, and securities and futures industries have no exposure to Zhongzhi Enterprise Group, the commission said.
As for Country Garden Holdings, there are only 22 professional investors who are clients of five Taiwanese banks that have bonds issued by the Chinese property developer, totaling NT$170 million, while one local bank reported US$9.02 million in loans to the firm, the commission said.
As of the end of June, the three major financial industries reported aggregate exposure of NT$1.12 trillion to China, with the banking industry having a combined exposure of NT$1.01 trillion, followed by NT$94.7 billion by the insurance industry and NT$15.73 billion by the securities and futures industry.
In the banking industry, lending to China was NT$697.4 billion at the end of June, with investments in the Chinese market totaling NT$237.4 billion and interbank loans totaling NT$75.4 billion, the commission said, adding that total exposure to China accounted for 23.91 percent of the industry’s net worth.
Exposure to China in the local banking industry and the ratio of exposure to net worth dipped to the lowest level since the commission started recording the data in the third quarter of 2013, it said.
The declines were evidence that the risks from exposure remained controllable, it said.
In the insurance industry, exposure to Chinese marketable securities totaled NT$94.7 billion at the end of June, down 5.02 percent from a year earlier, with the investments all by life insurance companies, it said.
No investments were reported by property insurers, it added.
In the securities and futures industry, exposure totaled NT$15.73 billion as of the end of June, with investments by Taiwanese securities firms totaling NT$12.79 billion, the largest contribution in the industry, it said.
The exposure among securities firms was NT$3.88 billion in business investments and NT$8.9 billion from proprietary securities firms, it said.
In addition, exposure from securities investment trust firms and futures merchants was NT$2.69 billion and NT$251 million respectively, it added.
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