Taipei, Jan. 1 (CNA) The United States remained the largest debtor country of Taiwan’s banking sector for a 33rd consecutive quarter in the third quarter despite a fall in Taiwanese banks’ holdings there, according to the latest data from Taiwan’s central bank.
As of the end of September, Taiwan-registered banks’ international claims on a direct risk basis, consisting of loans, investments, deposits and other holdings, totaled US$538.8 billion, down 2.02 percent from the end of June, according to Taiwan’s central bank.
In the U.S. alone, those claims totaled US$152.62 billion as of the end of the third quarter, down US$4.86 billion, or 3.08 percent, from the end of the second quarter.
It was the first time in seven quarters that the Taiwanese banks’ claims did not set a new high in their exposure to the United States.
In a statement, Taiwan’s central bank said the fall in exposure to the U.S. was due mainly to a decline in Taiwanese banks’ deposits there, and, to a lesser extent, to a fall in local banks’ lending to the U.S.’ public sector.
Exposure to the U.S. had risen in previous quarters as the Federal Reserve repeatedly raised interest rates to combat inflation, making U.S. dollar-denominated assets more attractive.
There was not enough evidence to conclude, however, that the decline in the third quarter resulted from banks’ expectations that the Fed’s interest rate hikes had come to an end as inflation moderates, the central bank said.
After the U.S., China was the second largest debtor nation for Taiwanese banks as of the end of third quarter, but total exposure fell from a quarter earlier amid concerns over the uncertainties faced by the Chinese economy, the central bank said.
Taiwanese banks’ outstanding claims in China on a direct risk basis fell US$310 million, or 0.67 percent, from a quarter earlier to US$46.17 billion at the end of the third quarter, the lowest since hitting US$46.13 billion at the end of the first quarter of 2020.
The central bank attributed the decline to Taiwanese banks cutting their holdings of mutual funds targeting the China market because of caution over its economic environment.
The next two biggest debtor countries were Luxembourg and Australia.
Taiwanese banks’ exposure to Luxembourg was US$36.48 billion at the end of the third quarter, down 1.06 percent from a quarter earlier, and their exposure in Australia rose 1.44 percent from a quarter earlier to US$32.43 billion, the central bank said.
Hong Kong fell to fifth among debtor areas, as Taiwanese banks’ exposure in the former British territory declined 8.24 percent from a quarter earlier to US$31.24 billion as the end of the third quarter, according to the central bank.
That decline was driven largely by a fall in interbank loans to the Chinese territory in the quarter.
Rounding out the top 10 debtor areas were Japan, with exposure of US$30.33 billion, the United Kingdom (US$18.62 billion), Vietnam (US$16.10 billion), the Cayman Islands (US$15.86 billion), and South Korea (US$15.62 billion).
