U.S. remains largest debtor to Taiwan as of end-June

Taipei-The United States remained the largest debtor to Taiwan as of the end of June, with the local banking sector's exposure to U.S. entities on the rise, despite continued trade tension between the U.S. and China, according to the central bank.

Data compiled by the central bank showed that outstanding international claims by Taiwanese banks from the U.S. as of the end of June totaled US$79.11 billion on a direct risk basis, up from US$74.21 billion at the end of March.

On an ultimate risk basis, which calculates a country's consolidated debts after risk transfers, Taiwanese banks' exposure to the U.S. stood at US$74.92 billion as of the end of June, up from US$71.61 billion a quarter earlier.

Market analysts said the increase largely reflected an appreciation of currency value fluctuations during the three-month period, and the global trade tensions imposed little impact on the local banking sector's exposure to Washington.

In addition, as Taiwanese investors were keen to invest in bonds and securitized financial instruments amid worries over a slowdown suffered by the U.S. economy, Taiwan's exposure to the U.S. increased accordingly, the analysts added.

China came in second after Taiwanese banks extended US$45.20 billion in loans to the China market as of the end of June on a direct risk basis, up from US$43.51 billion at the end of March, the central bank said.

On an ultimate risk basis, Taiwan's international claims from China also grew to about US$67.90 billion at the end of June, up from US$67.21 billion a quarter earlier, the central bank added.

The central bank said Taiwanese banks raised their investments in securities products to boost the exposure, while banks in Taiwan also increased their loans extended to their subsidiaries operating in China.

As of the end of June, outstanding international claims by banks in Taiwan rose 4.38 percent from the end of April to US$435.3 billion on a direct risk basis, while exposure on an ultimate risk basis also rose 3.98 percent to US$414.8 billion.

It was the second consecutive quarter in which Taiwan's outstanding international claims from the world had climbed, the central bank's data showed.

The central bank said that during the three months to June, Taiwanese banks raised interbank loans to their counterparts in Hong Kong, Japan and Singapore.

After the U.S. and China, Luxembourg took third place as the third-largest debtor to Taiwan on a direct risk basis as of the end of June, with exposure from Taiwanese banks at US$39.74 billion, up from US$38.45 billion a quarter earlier, ahead of Hong Kong with US$37.88 billion in exposure, Japan with US$32.66 billion, Australia with US$21.97 billion, the Cayman Islands with US$17.99 billion, the United Kingdom with US$17.68 billion, Singapore with US$16.90 billion, and the British West Indies with US$13.57 billion.

Bank exposure to Taiwan's top 10 debtors at the end of June stood at US$322.7 billion, accounting for 74.14 percent of the country's total international claims on a direct risk basis, the central bank said.

The non-bank private sector worldwide accounted for 62.63 percent of Taiwan's total international claims on a direct risk basis, with the banking industry making up 30.63 percent and the public sector representing 6.99 percent, the central bank said.

Source: Focus Taiwan News Channel