Taipei:The United States continued to be the largest debtor of Taiwanese banks for the 44th consecutive quarter at the end of June, with its share of the banks' total exposure exceeding 30 percent for the first time.
According to Focus Taiwan, data from the central bank indicated that Taiwanese banks' exposure to the U.S. on an immediate counterparty basis reached a record high of US$222.53 billion at the end of the second quarter, marking a 6.47 percent increase from the previous quarter.
The concept of immediate counterparty basis, as defined by the Bank for International Settlements, involves allocating positions to the primary party in a contract. Hsieh Jen-chun, deputy head of the central bank's Department of Financial Inspection, attributed the increased exposure to growth in interbank loans and investments, particularly in U.S. marketable securities amidst a robust stock market.
By the end of June, Taiwan's banks saw their total international claims on an immediate counterparty basis€”comprising investments, deposits, loans, and other holdings€”rise by 4.61 percent from the prior quarter to US$735.0 billion. This growth was largely driven by increased lending to the global non-bank private sector. Exposure to the U.S. accounted for 30.28 percent of the local banking sector's total, up from 29.75 percent at the end of March.
Luxembourg emerged as the second-largest area of exposure for Taiwan's banks, with a total of US$54.84 billion as of the end of June, reflecting a 6.07 percent rise from the preceding quarter. Hsieh noted that Luxembourg serves as a significant hub for mutual fund registration, facilitating local investments through its banks.
China ranked third, with exposure amounting to US$51.76 billion, increasing by 4.94 percent from the previous quarter. Hsieh pointed out that the gap in exposure between the U.S. and China expanded to a new high of US$170.7 billion by the end of June, with this quarterly gap surpassing US$100 billion for 13 consecutive quarters.
Australia was the fourth-largest debtor, with exposure totaling US$47.82 billion, up 2.06 percent from the previous quarter. Other notable exposures included Japan (US$41.46 billion, up 8.26 percent), Hong Kong (US$38.01 billion, up 11.67 percent), the United Kingdom (US$24.83 billion, down 1.35 percent), Singapore (US$23.87 billion, up 6.38 percent), France (US$20.83 billion, up 1.00 percent), and Vietnam (US$20.66 billion, up 7.74 percent).
The central bank reported that exposure to the top 10 debtor nations totaled US$546.62 billion at the end of June, a 5.80 percent increase from the previous quarter, representing 74.37 percent of Taiwan's banks' total international claims.