GROWING OWINGS:
While Luxembourg and China swapped the top three spots, the US continued to be the largest exposure for Taiwan for the 41st consecutive quarter

By Chen Cheng-hui / Staff reporter

The US remained the largest debtor nation to Taiwan’s banking sector for the 41st consecutive quarter at the end of September, after local banks’ exposure to the US market rose more than 2 percent from three months earlier, the central bank said.

Exposure to the US increased to US$198.896 billion, up US$4.026 billion, or 2.07 percent, from US$194.87 billion in the previous quarter, data released by the central bank showed on Friday.

Of the increase, about US$1.4 billion came from banks’ investments in securitized products and interbank loans in the US, while another US$2.6 billion stemmed from trust assets, including mutual funds, the central bank said.

Photo: Bloomberg

Luxembourg, known as a leader in providing global cross-border fund registration services, rose a spot to become the second largest debtor nation, with Taiwanese banks’ exposure increasing US$2.706 billion to US$50.767 billion, a record high, the central bank said.

China slipped one spot from a quarter earlier down to third-largest debtor nation, despite Taiwanese banks’ exposure growing US$1.065 billion to US$49.561 billion last quarter, central bank data showed.

While banks’ exposure to China increased 2.2 percent sequentially last quarter, their exposure to Luxembourg grew faster at 5.63 percent and lifted the European country’s ranking ahead from third to second place from the previous quarter, the central bank said.

The mild increase in Taiwanese banks’ exposure to China primarily reflected the market’s cautious sentiment toward China’s economic prospects, it said.

The Financial Supervisory Commission’s restrictions on Taiwanese banks’ investments and interbank loans in China led their exposure figure to range between US$40 billion and US$50 billion for quite a long time, it added.

The gap between Taiwanese banks’ exposure to the US and China widened further, reaching a fresh record of US$149.3 billion at the end of September, the central bank said.

The gap between banks’ exposure to the US and China has remained above the US$100 billion mark for 10 consecutive quarters after the figure first exceeded US$100 billion in June 2023, it added.

After the top three, Australia followed with US$42.137 billion and Japan with US$41.167 billion, up 4.76 percent and 10.5 percent from the previous quarter respectively, data showed.

Rounding out the top 10 debtor areas were Hong Kong with exposure of US$32.68 billion, the UK with US$23.195 billion, Singapore with US$20.617 billion, France with US$19.422 billion and Vietnam with US$17.579 billion, with sequential increases from 1.21 percent to 8.42 percent, the data showed.

Taiwanese banks’ exposure to the top 10 debtors totaled US$496.021 billion at the end of September, up 3.77 percent from the previous quarter and accounting for 73.95 percent of Taiwan’s total international claims of US$670.75 billion, which rose 3.48 percent from a quarter earlier due to an increase in lending to nonbank firms, the central bank said.