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U.S. Top Taiwan Banks’ Debtor Country for 32nd Straight Quarter

Taipei, Sept. 29 (CNA) The United States remained the largest debtor country of Taiwan’s banking sector for the 32nd consecutive quarter as of the end of June, as a stronger U.S. dollar attracted investment to the U.S. market, according to the central bank.

Taiwanese banks’ outstanding claims on the U.S. on a direct risk basis — a measure of their exposure to the U.S. market — totaled US$157.48 billion at the end of June, the highest level in the local banking sector’s history, central bank data showed.

That was US$13.34 billion, or 9.25 percent, higher than a quarter earlier, and represented the sixth straight quarter in which a new high was set.

Central bank officials said the U.S. Federal Reserve continued its rate hike cycle in the April-June period to combat inflation, and Taiwanese banks moved funds to the United States and into government bonds to take advantage of the higher return on investment.

The local banking industry also raised its interbank lending to American counterparts and injected more funds into the U.S. asset trust business during the three-month period, the officials said.

China remained the second largest debtor country to Taiwanese banks with outstanding claims at US$46.48 billion as of the end of June, but the figure was down US$248 million, or 0.53 percent, from a quarter earlier.

Exposure to China at the end of June was at its lowest level since the first quarter of 2020, when outstanding claims from Taiwanese banks on China totaled US$46.13 billion, the central bank said.

Bank officials said it will be worth watching if the lingering financial woes of Chinese property developers such as China Evergrande Group will affect the banking sector’s investments in China in the future.

Luxembourg was the country in which Taiwanese banks had the third highest exposure, after it ranked fourth a quarter earlier.

The banks had outstanding claims in Luxembourg of US$36.87 billion at the end of June, up 3.27 percent from a quarter earlier, according to central bank figures.

Hong Kong dropped one place to fourth with Taiwanese banks’ exposure there falling to US$34.03 billion at the end of June, down 7.20 percent from a quarter earlier.

After Hong Kong were Australia (US$31.97 billion, up 1.94 percent), Japan (US$30.995 billion, down 5.25 percent), the United Kingdom (US$19.23 billion, up 1.97 percent), and Vietnam (US$16.72 billion, down 1.56 percent), central bank figures showed.

Rounding out the top 10 were Singapore (US$16.14 billion, down 4.16 percent), and the Cayman Islands (US$15.89 billion, down 5.18 billion).

Taiwanese banks’ exposure in Japan declined because of the widening interest spread between the greenback and the Japanese yen, which led banks to move funds to the U.S. by cutting their investments in Japan, according to the central bank.

As of the end of June, the local banking sector’s international claims totaled US$549.9 billion, up 1.88 percent from a quarter earlier, with the top 10 debtor countries accounting for 73.79 percent of the total, the central bank said.

The increase in the latest international claims came as the banking industry invested more in the public sectors of its foreign debtors, the central bank said.

Source : Focus Taiwan