Exposure of Taiwan's financial firms to China dips to new low

Taipei, July 15 (CNA) The exposure of Taiwan's banking, insurance and securities sectors to China dipped to a new low as of the end of May due to concerns over a slowdown in the Chinese economy, according to the Financial Supervisory Commission (FSC).

Data released Monday by the FSC, the top financial regulator in Taiwan, showed that the exposure of the sectors to China as of the end of May fell by NT$201.3 billion, or almost 20 percent from a year earlier, to NT$828.39 billion (US$28.25 billion).

The end-May figure was also down about NT$48.56 billion from a month earlier, the data indicated. No mention was made of whether shifts in exchange rates affected the amount of exposure in a significant way.

Among the three financial sectors, the banking sector had the highest exposure to China at NT$768.45 billion as of the end of May, accounting for 92 percent of the three sectors' total, but it was down 18.67 percent from a year earlier.

That meant the local banking sector's China exposure to net worth ratio also fell to a new low of 15.9 percent as of the end of May, the FSC said.

Chang Chia-kuei (張嘉魁), chief secretary of the FSC's Banking Bureau, said banks' exposure to China consisted of lending, interbank loans and investments, with interbank loans falling 35 percent from a year earlier as of May.

The decline in exposure to China demonstrated that Taiwanese banks have become more cautious over China's economic growth prospects and the risks faced in the Chinese property market, leading them to scale back their lending and investments.

According to the FSC, CTBC Bank had the largest exposure of any domestic bank to China at NT$180.0 billion as of the end of May, ahead of Taipei Fubon Bank (NT$85.8 billion) and Bank SinoPac (NT$62.5 billion).

The FSC said the ratio of China exposure to net worth of CTBC Bank, Taipei Fubon Bank and Bank SinoPac was 49 percent, 31.1 percent and 35.5 percent, respectively, as of the end of May.

The local insurance sector's investments in marketable securities in China fell 30 percent from a year earlier to NT$49.9 billion, and the investments all came from life insurers, the FSC said.

The insurance industry's exposure to China accounted for only 0.15 percent of its disposable capital as of the end of May, the FSC said.

Tsai Huo-yen (蔡火炎), deputy director of the FSC's Insurance Bureau, said the decline reflected worries over China's economic and political conditions.

Meanwhile, exposure of the local securities and futures industry to China also fell 21 percent from a year earlier to about NT$10.04 billion as of the end of May, accounting for 1.24 percent of the industry's net worth, the FSC said.

Huang Chung-hao (黃仲豪), chief secretary of the FSC's Securities and Futures Bureau, said Taiwanese securities firms adjusted their investment portfolios in the Chinese market based in part on the uncertainty over the United States' arbitrary tariff policies.