U.S. remains top debtor of Taiwan's banks for 44th straight quarter

Taipei, Oct. 3 (CNA) The United States remained the largest debtor of Taiwanese banks for the 44th consecutive quarter at the end of June, with its share of Taiwanese banks' total exposure surpassing 30 percent for the first time, according to the central bank.

Data released by the central bank showed that Taiwanese banks' exposure to the U.S. on an immediate counterparty basis reached a new high of US$222.53 billion at the end of the second quarter, up 6.47 percent from a quarter earlier.

According to the Bank for International Settlements, the immediate counterparty basis is a methodology under which positions are allocated to the primary party to a contract.

Hsieh Jen-chun (謝人俊), deputy head of the central bank's Department of Financial Inspection, said the increase in exposure to the U.S. resulted from growth in interbank loans and investments.

Hsieh said the increase in investments largely came from investments in and fund deposits in U.S. marketable securities amid a booming stock market.

At the end of June, Taiwan's banks' total international claims on an immediate counterparty basis, consisting of investments, deposits, loans and other holdings, rose 4.61 percent from a quarter earlier to US$735.0 billion, 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 at the end of June, a new high, up from 29.75 percent at the end of March, the data showed.

The Taiwan banking sector's second-largest area of exposure was Luxembourg, at US$54.84 billion as of the end of June, up 6.07 percent from a quarter earlier, the central bank said.

Hsieh described Luxembourg as an important hub for mutual fund registration, meaning many local investors invest through banks in the country.

China came in third, with exposure totaling US$51.76 billion at the end of June, up 4.94 percent from a quarter earlier, the central bank said.

Hsieh said the gap in exposure between the U.S. and China widened gradually to a new high of US$170.7 billion at the end of June. Since the second quarter of 2023, the quarterly gap has exceeded US$100 billion for 13 consecutive quarters.

Australia was the fourth-largest debtor of Taiwan's banks, with exposure totaling US$47.82 billion as of the end of June, up 2.06 percent from a quarter earlier, central bank data showed.

The next-largest areas of exposure for Taiwanese banks were 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), according to the data.

The central bank said exposure to the top 10 debtor nations totaled US$546.62 billion at the end of June, rising 5.80 percent from a quarter earlier and representing 74.37 percent of Taiwan's banks' total international claims.